The S&P 500 rose 0.8% Wednesday, recovering most of its losses since the U.S.-Iran war began five days ago, as oil prices pulled back from intraday highs and two economic reports pointed to continued strength in hiring and the services sector. The Dow Jones Industrial Average climbed 238 points, or 0.5%, to 48,739.41, and the Nasdaq composite gained 1.3% to close at 22,807.48, according to the Associated Press. The gains followed a jarring overnight session in Asia, where South Korea’s Kospi index fell 12.1% — its worst single-day loss in history.
Markets remain caught between encouraging domestic economic data and the open-ended uncertainty of a war that has sent oil prices sharply higher, complicating the Federal Reserve’s path back to interest-rate cuts and raising questions about how long consumer spending and corporate profits can hold.
Oil prices moderate
Brent crude, the international oil benchmark, settled at $81.40 a barrel after briefly rising above $84 during Asian trading hours. Benchmark U.S. crude rose 0.1% to $74.66. Oil prices have been the main driver of financial-market swings since the conflict began, with most assets tracking crude’s direction as trading moves from Asia to Europe to North America.
Economic data offer reassurance
A services-sector report showed U.S. business activity in real estate, finance, and related industries accelerated last month at the fastest pace since the summer of 2022. Prices for those businesses also rose at a slower rate — at least before the war with Iran began. A second report suggested U.S. employers outside the government increased hiring last month, a hopeful signal ahead of the government’s comprehensive employment report due Friday.
Wall Street movers
Technology stocks provided the strongest single lift to the S&P 500. Amazon rose 3.9% and Nvidia gained 1.7%; because they rank among the market’s largest companies by total value, their moves carry outsized weight in the index.
Stocks linked to the crypto industry surged as bitcoin’s price rebounded above $73,000. Coinbase Global jumped 14.6% and Robinhood Markets gained 8.1%.
Ross Stores climbed 8% after reporting earnings and revenue above analyst expectations for the latest quarter and saying it entered 2026 with “solid momentum.” Expedia Group rose 3.1%, as hopes for a solid economy and moderating gasoline prices suggested consumers may have more to spend on travel.
The Federal Reserve’s dilemma
The yield on the 10-year Treasury note rose to 4.09% from 4.06% late Tuesday, extending a climb that began early in the week as investors priced in the risk of worsening inflation. The Federal Reserve, which had indicated plans to resume interest-rate cuts later this year to support the job market, now faces a harder task: higher oil prices push inflation upward, but raising rates to contain inflation would increase the cost of borrowing for households and businesses. Traders have pushed their forecasts for when the Fed could next cut rates further into the summer, the AP reported.
‘The situation is very grim’
Not all market participants shared Wednesday’s cautious optimism. “I think the Iran situation is getting out of hand, and I think that U.S. President Donald Trump miscalculated enormously,” said Francis Lun, CEO of Venturesmart Asia. “The situation is very grim.”
The U.S. stock market has a history of recovering from military conflicts in the Middle East relatively quickly, though analysts note that outcome typically requires oil prices to remain contained — a condition that has not yet been established in the current conflict.
Global markets mixed
European indexes rose following the earlier declines in Asia. France’s CAC 40 gained 0.8% and Germany’s DAX gained 1.7%.
Asian markets fell broadly. Japan’s Nikkei 225 dropped 3.6% and Hong Kong’s Hang Seng fell 2%, while South Korea’s Kospi recorded the historic 12.1% single-day decline — a result, the AP reported, of the week’s war-driven uncertainty radiating through global financial markets.