The United States seized an Iranian-flagged cargo ship in the Gulf of Oman on Sunday, reigniting tensions that sent oil prices climbing and pulled U.S. Stocks back from record highs.
President Donald Trump announced the seizure in a Truth Social post, stating the vessel was under U.S. Treasury sanctions due to prior illegal activity and that the U.S. Had full custody of the ship and was inspecting its contents. He also warned that the U.S. Would destroy all power plants and bridges in Iran if Tehran refused to agree to a deal.
The move came after Iran declined to join another round of U.S.-led peace talks in Pakistan and followed a weekend in which Tehran declared the Strait of Hormuz reopened to commercial traffic — only to close it again by Saturday, accusing the U.S. Of failing to meet its obligations under a prior ceasefire.
Crude prices reacted swiftly: West Texas Intermediate futures rose 5% to above $88 per barrel, whereas Brent crude climbed 5.1% to $94.98. Though significant, the gains were modest compared to earlier spikes in the conflict, when Brent briefly surpassed $119 per barrel.
U.S. Equity markets gave back some of their recent strength. The S&P 500 slipped 0.4% from its all-time high, marking just its second decline in 14 days. The Dow Jones Industrial Average fell 115 points, or 0.2%, and the Nasdaq Composite dropped 0.7% as of 11 a.m. Eastern time.
Traders on the Recent York Stock Exchange floor said they were betting on a eventual compromise between the two nations, despite the escalation. David Wagner, head of equities at Aptus Capital Advisors, told CNBC that “the war with Iran is now in the rearview mirror for the market,” reflecting a belief that investors remain confident a deal will be reached before the current ceasefire expires Tuesday night at 8 p.m. Eastern time.
For more on this story, see U.S. Navy Seizes Iranian Cargo Ship in Gulf of Oman, Triggering Market Sell-Off.
Still, the market’s resilience was evident elsewhere. Semiconductor stocks continued their historic run, with the iShares Semiconductor ETF (SOXX) logging its 14th straight day of gains — the longest streak since June 2014 — and on pace for its best month ever, up roughly 25% since inception in July 2001. The Philadelphia Semiconductor Index posted its strongest monthly performance since February 2000.
Software shares also advanced, with the iShares Expanded Tech-Software Sector ETF (IGV) rising 0.6%. Wagner attributed the broader market’s strength to strong first-quarter earnings and expectations for continued growth, arguing that valuations were not stretched and that earnings expansion could fuel further gains.
Airline and cruise line stocks bore the brunt of higher fuel costs: Norwegian Cruise Line Holdings fell 5.1%, Carnival dropped 1.4%, United Airlines slipped 2.4%, and American Airlines lost 5% after rejecting a merger proposal with United.
This follows our earlier report, U.S. Navy seizes Iranian ship, Iran closes Strait of Hormuz, oil prices jump.
On the gainers’ list, TopBuild surged 16.4% after QXO announced a $17 billion acquisition that would produce it the second-largest publicly traded building products distributor in North America; QXO’s own stock fell 8.2% on the news.
Why did oil prices rise less sharply than in earlier phases of the conflict?
Investors appear to be pricing in a continued belief that a U.S.-Iranian agreement is still possible, which would restore oil flows and limit long-term supply disruptions, even amid short-term escalations.
How can semiconductor stocks be hitting record highs while broader markets retreat?
Strong earnings, persistent demand for chips, and sector-specific momentum are insulating tech stocks from geopolitical jitters, allowing them to outperform even as investors reassess risk elsewhere.
