Stocks Rebound as Oil Reverses Course After Early Spike

U.S. equities staged a strong comeback to start the week, recovering from steep early losses as oil prices reversed sharply lower later in the session. The S&P 500 rose 0.8%, the Nasdaq Composite climbed 1.4%, and the Dow Jones Industrial Average gained 0.5%, reflecting a broad rebound across the market.

The trading day began under significant pressure as crude oil prices surged past $100 per barrel during the morning, briefly testing the $120 level. The spike followed ongoing geopolitical tensions surrounding the conflict in Iran and sent the major indices sharply lower at the open. At one point, the Nasdaq Composite slipped below its 200-day moving average, highlighting the intensity of early risk-off sentiment.

Oil prices began to stabilize later in the morning after reports that the Group of Seven (G7) nations plan to hold emergency discussions on releasing strategic oil reserves to help contain the recent surge in energy prices. According to reports, talks among G7 members regarding a coordinated release have been constructive, with a meeting scheduled for the following morning.

For much of the session, equities traded with modest losses as investors monitored developments in energy markets. However, sentiment shifted dramatically in the afternoon after comments from President Donald Trump suggested that the conflict in Iran could be nearing its conclusion. The president indicated that U.S. operations are progressing faster than expected and added that shipping activity has resumed through the Strait of Hormuz.

Those developments triggered a sharp reversal in oil prices. Although crude oil futures settled up 4.3% at $94.73 per barrel, prices dropped significantly in after-hours trading, falling below $90 and extending losses toward the mid-$80 range.

As energy prices retreated, stocks rallied broadly into the close. Nine of the eleven S&P 500 sectors finished higher.

The information technology sector led the advance with a gain of 1.8%. Semiconductor stocks were particularly strong, with NVIDIA posting a solid gain and memory-chip makers such as SanDisk surging sharply. Their strength helped lift the broader semiconductor group and supported the technology sector throughout the day.

Communication services also posted a notable gain, driven in part by strength in Alphabet. Entertainment giant Live Nation Entertainment was among the top performers in the sector after reaching a settlement with the U.S. Department of Justice that allows it to retain control of Ticketmaster.

The health care sector rounded out the top performers. Moderna contributed to the sector’s strength, while telehealth company Hims & Hers Health soared after announcing plans to integrate FDA-approved weight-loss drugs, including Wegovy and Ozempic, onto its platform following a resolution of a legal dispute with Novo Nordisk.

Energy stocks finished slightly lower as oil prices reversed course late in the session, while financial stocks also ended in negative territory. Insurance firms such as Arthur J. Gallagher were among the day’s weakest performers, although the sector recovered from deeper losses earlier in the day.

Smaller companies participated in the rebound as well. The Russell 2000 rose 1.1%, and the S&P MidCap 400 gained 1.0%, both benefiting from the late-session improvement in risk sentiment.

Overall, the market delivered an impressive turnaround after a volatile start. The dramatic reversal in oil prices helped calm fears about inflation and economic disruption, allowing equities to finish the day solidly higher. Investors will now focus on the upcoming G7 meeting on energy policy as well as continued developments in the Iran conflict, both of which remain critical drivers of market sentiment in the near term.

Our FTinvest 11 model portfolio gained 0.42% to close at 991.62, rebounding after last week’s sharp pullback. The portfolio recovered part of the recent losses, though it remains below the 1,000 level and its earlier all-time high of 1,039.51.

The modest bounce suggests some stabilization following recent volatility. While short-term momentum has softened compared with the strong rally earlier in the year, FTinvest 11 continues to demonstrate resilience as it navigates this consolidation phase.