The S&P 500 briefly turned positive on Monday, rebounding from sharp declines earlier in the day, as investors bought the dip following U.S. and Israel strikes on Iran over the weekend.

A few major factors fueled the comeback:

• U.S. oil prices traded off their highest levels of the session, easing concerns about the war’s impact on the U.S. economy.
• Investors bought heavily the tech leaders of the bull market like Nvidia and Microsoft, cash-rich companies that could be resilient to any war impact.
• There’s history of equities largely shaking off past geopolitical conflicts.

The S&P 500 was last trading down 0.2% after falling 1.2% at its lows. The Nasdaq Composite was higher by 0.2% after declining 1.6% at the low. The Dow Jones Industrial Average was down 145 points, or 0.3%. At its lows the Dow was down nearly 600 points.

“Futures markets overreacted to the Iranian conflict, creating an opportunity to buy the S&P 500 as it neared its 2026 lows,” said Jeff Kilburg, CEO of KKM Financial, who posted Sunday night that the market would turn green before the close Monday. “We remain in a bull market despite escalating geopolitical tensions.”

Nvidia shares gained 3%, and Microsoft was up by more than 1%. Bank shares and other hard-hit stocks tied to the economy like Caterpillar were well off their lows with many trading higher.

The joint U.S.-Israeli strikes killed Supreme Leader Ayatollah Ali Khamenei, marking a watershed moment for the Islamic Republic and one of its most consequential episodes since 1979.

President Donald Trump said Monday that the military operation against Iran “was our last, best chance to strike” to “eliminate the intolerable threats posed by this sick and sinister regime.” He also said that he believes the U.S. will “easily prevail” in the country and anticipates the conflict will last four to five weeks, though he added it could go on “far longer than that.”

Iranian officials vowed a forceful retaliation against the strikes, raising fears the conflict could escalate further across the region as blasts were heard in places such as Dubai and Abu Dhabi.

U.S. crude prices gained as investors worried the confrontation could spiral into a broader war that disrupts supplies. Iran is the fourth-largest oil producer in OPEC. Though crude prices came off their highs of the day, which helped sentiment, they were still last up more than 6%. Crude was up 12% at its high.

The oil market’s trajectory may hinge on whether fighting disrupts traffic through the Strait of Hormuz, the world’s most important chokepoint for crude flows. A sustained interruption there could reverberate through global energy markets and reignite inflation pressures.

While Baird’s Ross Mayfield believes that a lot can still change with the conflict, he thinks the market is clawing back earlier losses because “there hasn’t been escalation from here.”

“If Iran were going to take the nuclear option of closing the Strait or really trying to do damage to energy infrastructure, we’d have a better sense that that was going to be their path by now,” the investment strategist said.

On top of tech, a rise in defense stocks helped the major averages recoup a chunk of their losses. Northrop Grumman advanced around 4%, as did RTX, while Lockheed Martin climbed 2%. Energy shares including Exxon Mobil and Chevron saw gains as well.

Traders Monday may also be getting ahead of a well-known historical pattern where stocks dip initially but typically trade higher in the weeks following geopolitical conflicts. Data from Wells Fargo shows the S&P 500 typically turns positive within two weeks of a major conflict and is higher by 1%, on average, three months out.