Brent crude touched $115 a barrel on Monday amid new threats from President Trump that the U.S. could destroy Iranian infrastructure, including power plants and oil wells, if the Strait of Hormuz isn't reopened.

Brent crude, the international benchmark, rose to $115 a barrel on Monday before retreating to $107.95, according to data from Oilprice.com and FactSet. West Texas Intermediate, the U.S. benchmark, rose 2% to $101.70.

Still, the U.S. stock market rose on Monday, reversing some losses after the Dow Jones Industrial Average entered correction territory on Friday, following five weeks of declines. Wall Street focused on more positive comments from Mr. Trump in the same social media post on Monday, where he described "great progress" in negotiations with Iran.

The S&P 500 added 0.6% in early trading, coming off its worst week since the war with Iran began. The Dow Jones Industrial Average was up 381 points, or 0.85%, as of 11 a.m. Eastern time, and the Nasdaq composite was 0.3% higher.

"Stocks continue to fight an uphill battle against oil prices and political uncertainty," said Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley, in an email. "History shows most geopolitical shocks tend to have a relatively short-lived impact on the market, but without clear evidence of an endgame for the Iran war, stocks will find it difficult to see past the current volatility and sustain upside momentum."

Looking for bargains
With stocks cheaper than they were before the war, some investors are looking for an opportune time to buy.

The S&P 500 finished last week 7.4% below its all-time high, which was set in January. The Dow and Nasdaq both were more than 10% below their records, a steep enough fall that professional investors call it a "correction."

Taking into account how much profits are expected to grow in the coming year for companies in the S&P 500, the index looks 17% cheaper than before the war, by one measure. That's in a similar range as prior scares for the market that didn't result in a recession or the Federal Reserve hiking interest rates, according to strategists at Morgan Stanley.

That's one of the signs that the strategists led by Michael Wilson point to as "growing evidence the S&P 500 correction is getting closer to its ending stages."

Inflationary risks
Rising oil prices and a rebounding market followed a whirlwind of action in the war over the weekend, none of which cleared up when the fighting may end. The main issue for investors worldwide is whether oil and natural can resume their full flow from the Persian Gulf to customers and prevent a brutal blast of inflation.

Some economists say there's an increasing risk that the Federal Reserve will keep interest rates steady — or even hike the benchmark rate— if it decides oil prices are so high that it needs to increase the cost of borrowing to keep inflation under control. Higher interest rates would help keep a lid on inflation, but they would also slow the economy and push down on prices for all kinds of investments.

Treasury yields have been leaping in the bond market since the war began because of such worries, but they eased somewhat on Monday.

The yield on the 10-year Treasury fell to 4.35% from 4.44% late Friday. That's a significant move for the bond market and offers some breathing room for Wall Street.

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