NEW YORK — The S&P 500 pushed above the 6,600 level in early trading Monday as investors welcomed tentative signs of potential de-escalation in the U.S.-Iran conflict, easing pressure from elevated oil prices that have weighed on the benchmark throughout a challenging start to 2026.

The broad-market index traded near 6,604 in midday action, building on modest gains from the previous close of 6,582.69 on April 2. The move reflected cautious optimism that diplomatic efforts could stabilize energy flows through the Persian Gulf and prevent prolonged inflationary spikes, even as uncertainties lingered over the broader Middle East situation.

The S&P 500 has struggled in the first quarter of 2026, finishing down approximately 4% to 4.6% after a strong 2025 that delivered an 18% total return. Geopolitical tensions, surging oil prices and questions about economic resilience contributed to the weakest quarterly performance since 2022, though a late-March relief rally helped limit the damage.

Monday’s trading featured lighter volume typical of the post-Easter period, with the Dow Jones Industrial Average and Nasdaq Composite also showing small advances. Technology and financial sectors provided support, while energy shares lagged amid moderating crude futures. The session highlighted improving market breadth as capital rotated toward economically sensitive names on hopes of lower energy costs.

Analysts noted that any meaningful progress toward stabilizing the region could remove a major headwind for corporate spending and consumer confidence. Treasury Secretary Scott Bessent had signaled earlier U.S. efforts to keep oil markets functioning, contributing to the improved sentiment. Oil prices eased modestly after recent spikes triggered by disruptions, helping temper fears of a sustained “inflationary pincer” effect.

Despite the year-to-date decline, corporate earnings have offered resilience. Many S&P 500 companies reported solid results, supported by steady consumer spending among higher-income households and ongoing investment in artificial intelligence. Profit growth has held up better than some pessimists anticipated, providing a foundation for long-term optimism even amid near-term volatility.

The Federal Reserve’s decision to hold interest rates steady while projecting limited easing later in 2026 has helped anchor expectations. Chair Jerome Powell acknowledged temporary inflationary pressures from higher oil but suggested disruptions could prove short-lived if tensions ease. Markets continue to price in modest policy support, preventing a deeper sell-off so far in 2026.

Wall Street strategists have maintained largely constructive outlooks. Several major firms project the S&P 500 could reach 7,000 to 7,600 by year-end, citing expected 12% earnings-per-share growth driven by AI productivity gains, resilient corporate margins and potential fiscal tailwinds. Valuation levels, while elevated in growth sectors, are viewed as reasonable given structural shifts in the economy.

Risks remain prominent. Renewed escalation in the Middle East could quickly reverse gains by pushing oil higher and reigniting inflation concerns. Smaller companies in the Russell 2000 have shown sporadic strength on hopes of broader participation, but they remain more vulnerable to higher borrowing costs and any slowdown in domestic activity.

Treasury yields moved modestly as investors balanced growth hopes against lingering inflation risks. The CBOE Volatility Index eased slightly, signaling reduced fear compared with March’s sharper swings. Trading volume remained subdued, consistent with lighter holiday-week activity.

The S&P 500’s ability to hold above 6,600 will depend on concrete diplomatic developments and upcoming economic data, including employment reports and inflation readings. April has historically been a positive month for equities, though this year’s geopolitical overlay makes seasonal patterns less reliable.

For individual investors, the current environment underscores the value of diversification and a long-term perspective. While the benchmark is down modestly for the year, many high-quality companies continue to demonstrate earnings strength and strategic investments in transformative technologies. Financial advisers recommend balanced portfolios with exposure to both growth and defensive names amid persistent uncertainties.

International markets showed mixed performance, with European shares gaining modestly on similar de-escalation hopes and Asian indexes more subdued amid global spillovers and domestic challenges.

As the second quarter begins, the market narrative centers on whether AI-driven productivity gains and corporate earnings momentum can outweigh near-term macroeconomic and geopolitical headwinds. Monday’s trading offered an early indication that investors are willing to reward positive headlines on the energy and diplomatic fronts.

The broader U.S. economy has sent mixed signals, with some softening in job growth offset by corporate resilience and prior rate cuts that have kept borrowing costs manageable. Fiscal measures have provided additional support in key areas.

The S&P 500, widely regarded as the best gauge of large-cap U.S. equities, now sits near 6,600 after clawing back some ground from recent lows. Whether this modest rebound broadens into sustained recovery will hinge largely on developments in the Middle East and the trajectory of energy prices.

For now, the index continues to reflect both the challenges and underlying opportunities of 2026 — a year defined by volatility but supported by strong corporate fundamentals and long-term technological trends. Investors will watch closely for further clarity on the global stage as April trading unfolds.