Stocks gained and oil prices dropped Monday after Iran's retaliation for US attacks on its nuclear facilities proved minimal and investors anticipated a cooling in Middle East tensions. The Dow Jones industrial average firmed by 0.9 percent, the S&P 500 gained 1.0 percent, and the Nasdaq advanced 0.9 percent. Oil prices plunged while the dollar and US Treasury yields declined.

After US strikes late Saturday on Iranian nuclear facilities at Fordo, Isfahan and Natanz, markets were braced for Iran to strike back amid fears the conflict would escalate and might include a disruption in crude oil supplies. But in the event, Iran notified the US and Qatar before firing a limited number of missiles at the US airbase in Al Udeid, Qatar, and there were no casualties as the missiles were intercepted. Markets see the Iranian restraint as an indication the US and Iran are likely to sort out their differences in negotiations even if Israel remains hostile.

Among sectors, Magnificent Seven stocks led the winners, with Tesla a big winner after rolling out its autonomous taxis. Other winners included banks, telecom, retailers, grocery stores, airlines, utilities, and homebuilders. Lagging were energy, restaurant chains, chemicals, managed care and biotech.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.