U.S. stocks rebounded on Monday after an early drop, as investors remained hopeful that tensions between the United States and Iran could ease despite a blockade of the Strait of Hormuz.

The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all closed higher, led by gains in technology shares.

Oil prices, which had traded above $100 a barrel earlier in the day, pulled back by the close.

Shipping through the Strait of Hormuz has dropped sharply due to the ongoing conflict, raising concerns about global energy supply, CBS News has reported.

Analysts said markets appear to be pricing in a possible diplomatic resolution rather than continued escalation.