Dow markets opened weak as dow jones futures fell more than 1% in premarket trading, Reuters reported, with E-mini contracts signaling a steep drop before the bell.
Market data showed the three major averages later recovered to close higher, with the S&P 500 at 6,795.99 up 0.83%, the Dow Industrials at 47,740.80 up 239.25 points, and the Nasdaq Composite at 22,695.95 up 1.38%.
Traders blamed the swing on escalating conflict in the Middle East and a sharp jump in oil prices, which moved past $100 a barrel, with West Texas Intermediate at $101.56 and Brent at $101.81, according to market quotes and reports.
Reuters said crude had also climbed more than 25% and moved close to $120 per barrel as the Iran war continued into its tenth day, while the earlier market report noted a 35% surge in U.S. crude last week.
BlackRock investment strategists warned the oil surge will likely create turbulence but said the shock may prove short lived, and the firm said it remains underweight long-dated U.S. Treasuries while favoring equities in the US and Japan.
OPIS chief oil analyst Denton Cinquegrana said retail gasoline prices are likely to plateau near $4 per gallon by the end of the week, and the national average stood around $3.478 per gallon, according to the AAA figure cited in coverage.
Volatility and yields reacted, with the Cboe VIX rising into the mid-30s, and the 10-year U.S. Treasury yield last noted near 4.127% after reaching 4.15% the prior week, a move analysts say could presage market shifts if it continues.
Market Moves, Sector Strain And Policy Responses
Sector moves were uneven as investors re-priced risk, with cruise lines and cosmetics among the hardest hit due to fuel and demand worries, while defense stocks rose on the conflict’s persistence.
The S&P financials sector fell about 2%, leaving private credit firms down sharply this year, and small-cap benchmarks like the Russell 2000 showed outsized pressure amid higher energy costs and borrowing sensitivity.
Deutsche Bank strategist Henry Allen argued the market has some distance to a larger risk-off move because a sustained oil spike, hawkish policy action or broader macro damage have not yet fully materialized.
Morgan Stanley analysts said they remain constructive on US stocks over the next six to 12 months, noting earnings momentum and a consolidation of market positioning that could limit further downdrafts.
Policymakers weighed supply responses, with G7 energy ministers scheduled to meet virtually to discuss potential oil reserve releases, and G7 finance ministers holding earlier talks without reaching a decision, according to reporting.
On the corporate side, Rothschild & Co Redburn upgraded GE Vernova to buy and doubled a target price, while rare earth and defense-related names drew attention after government stakes and sector demand shifted investor interest.
