Key Takeaways:
U.S. stocks capped their best week since November 2025, demonstrating resilience as investors shook off a mid-week surge in oil prices and digested the prospect of a prolonged conflict in the Middle East. The major indexes recovered from a sharp sell-off early Thursday that followed President Donald Trump’s signal that military action against Iran could continue for weeks.
“I think investors are having knee-jerk reactions — they want the news to be good, but then think about it a little longer and decide perhaps the uncertainty is still too high, hence the high intraday volatility,” said Melissa Brown, managing director of investment decision research at SimCorp, as quoted by CNBC.
The S&P 500 fell as much as 1.2% in early trading Thursday before reversing course to finish with a slight gain. The initial plunge came after President Trump, in a Wednesday evening address, vowed to hit Iran “extremely hard” and failed to provide a clear timeline for reopening the Strait of Hormuz, a critical artery for global oil shipments. The comments sent West Texas Intermediate crude futures soaring 11.3% to $111.54 a barrel, while Brent crude, the international benchmark, jumped 7.8% to $109.03.
Despite the volatility, the S&P 500 ended the holiday-shortened week with a 3.4% gain. The Dow Jones Industrial Average advanced 3% for the week, while the tech-heavy Nasdaq Composite led with a 4.4% rise. The recovery suggested some investors are looking past the immediate geopolitical turmoil, with futures contracts pricing crude oil back in the $80s by July, according to Barron's. The market's focus now turns to the upcoming corporate earnings season.
Some strategists see the recent turbulence as a buying opportunity, particularly in sectors beaten down by inflation and rate fears. “The world isn’t ending. You can pick your spots,” said Stephanie Link, chief investment strategist at Hightower Advisors, in an interview with Barron's. She pointed to home builders like Toll Brothers and D.R. Horton as “ridiculously cheap.”
Technology stocks, which have been under pressure, are also starting to look more reasonably valued. The Roundhill Magnificent Seven ETF (MAGS) now trades at about 27 times forward earnings, near a five-year low, Barron's noted. “There are opportunities in the market, and tech is a big part of it. Tech is now undervalued,” Marta Norton, chief investment strategist at Empower Investments, told the publication.
Thursday's session highlighted a defensive tilt. Utilities and real estate stocks gained, while sectors sensitive to fuel costs and economic growth lagged. United Airlines fell 3%, and cruise operator Carnival shed 3.5%. The energy sector was a clear winner from the spike in crude prices, with Exxon Mobil gaining 3.1% and Chevron up 3.4%.
The 10-year Treasury yield remained relatively stable, falling slightly to 4.30%, indicating that bond investors may not be pricing in a sustained inflationary shock from the oil surge. However, the CBOE Volatility Index (VIX) spiked during Thursday's session before easing, reflecting the lingering uncertainty.
This article is for informational purposes only and does not constitute investment advice.
