Oil Prices Stabilize as S&P 500 Recovers Above 6700, Will the Relief Rally Continue?

The U.S. stock market rebounded in unison as the sharp rise in oil prices driven by Middle East tensions took a breather. The Dow rose 0.84% to around 46,950, the S&P 500 gained 1.03% to 6,700, and the Nasdaq jumped 1.22% to about 22,375. This “rebound rally” came after three straight weeks of declines fueled by worries over a possible war with Iran and a blockade of the Strait of Hormuz.

The day’s primary market mover was oil. U.S. and Brent crude, which had traded at $100 earlier, slipped back into the high $90s amid reports that tanker traffic might resume and that the International Energy Agency was considering releasing strategic reserves. Those developments eased fears of renewed inflation, sending Treasury yields lower and prompting a rotation into risk assets, particularly growth and consumer stocks.

The session also took place on the eve of the Fed’s March FOMC meeting. A rate hold is widely expected, but all eyes are on how the Fed’s dot plot and inflation forecasts will be adjusted to reflect Middle East tensions and oil shocks. Investors are partially unwinding an extreme safe-haven bias on the view that, while deep rate cuts this year are off the table, there remains scope for easing later if economic growth slows.

On the sector front, NVIDIA’s GTC conference refocused attention on AI, robotics and data-center names. At the same time, big tech’s announcements of large-scale layoffs alongside plans to invest tens of trillions of Korean won annually in AI have reinforced a selective buying trend favoring companies with solid earnings and cash flows. Reports that the U.S. Securities and Exchange Commission is considering easing quarterly earnings-reporting requirements in favor of semiannual disclosures also suggest a shift in sentiment among firms and investors previously pressured by short-term results.

Nevertheless, the risks of conflict with Iran and disruptions in the Strait of Hormuz remain. The U.S. administration has publicly called for allied support, and the possibility of further attacks on regional oil and gas infrastructure could reignite volatility in energy, defense and oil stocks at any time. For Korean investors, it may be prudent to treat this relief rally as a short-term bounce while closely monitoring upcoming Fed signals, Middle East developments and the direction of oil prices.