Oil Prices Plunge, New York Stock Market Sees V-Shaped Recovery Amid Temporary War Fears

On the 9th in New York, stocks closed higher after extreme swings. The S&P 500 erased an intraday loss of more than 1.5% to finish up 0.8% at 6,795.99. The Dow Jones Industrial Average rose 0.5%, and the Nasdaq Composite added 1.4%.

The early sell-off was driven by fears that a prolonged Iran war had pushed oil prices to $120 over the weekend, stoking inflation and Fed-tightening concerns. Markets staged a V-shaped recovery, however, after President Trump suggested the conflict could end soon and reports emerged that the U.S. might tap its Strategic Petroleum Reserve and ease sanctions on Russian oil—sending crude back toward $90.

With the Fed pausing rate cuts at its January meeting and key February CPI and PCE inflation readings due this week, investors are now more focused on how oil prices could influence future inflation and interest-rate paths than on the data releases themselves.

Although upbeat forecasts from select mid-cap companies, including Hewlett Packard Enterprise, offered some support, market direction remained dominated by war and oil news. Energy and defense stocks rode an intraday roller coaster, while the growth-heavy Nasdaq outperformed. Yet warnings persist that if oil surges back above $100, the S&P 500 could face another roughly 10% pullback. Despite the recent rebound, most analysts agree that the period of heightened volatility is far from over.