US stocks found their footing on Monday, with the S&P 500 and Nasdaq reversing early losses to close back in positive territory as investors took a second look at Middle East risk and energy prices.
At press time, the S&P 500 was trading at 6,884.46, almost 0.01% up from its previous close, while the Nasdaq Composite was 0.42% up at 22,772.22. The Dow Jones Industrial Average was almost flat at 48,969.36.
The move higher came after a bruising open, when Wall Street traders reflected fears that the Iran conflict could spill directly into global oil supply and shipping routes.
What drove the selloff, and why it faded
At the opening bell, markets traded squarely in “risk-off” mode.
Oil prices were higher, gold was up, and equity indices dropped as traders tried to price the worst-case scenario around the Strait of Hormuz and broader regional escalation.
The logic was straightforward: if a key artery for global crude flows were meaningfully disrupted, the impact would hit both inflation and growth expectations.
As the session progressed, however, the absence of fresh escalation headlines took some of the urgency out of that trade.
Energy prices stayed elevated, but they didn’t accelerate into a new intraday spike. With no new shock to react to, the market began to retrace part of the early move.
That gave room for a familiar pattern to reassert itself: once it became clear that the day was tracking closer to “heightened tension” than “new emergency,” buyers started stepping back into parts of the market that had been hit hardest in the initial downdraft.
It was a classic case of selling the “war premium” on the headline, then buying the dip once the most alarming scenarios failed to materialise intraday.
What does the bounce tell investors?
Monday’s rebound says something important about positioning and sentiment, but it doesn’t cancel the underlying risks.
On the one hand, the recovery shows that there is still a bid underneath US equities when fears ease even slightly.
Investors who had rushed into defensive trades were willing to rotate back toward risk once the news flow stabilised during US trading hours.
That’s constructive for market functioning and liquidity in the short term.
On the other hand, key pressure points haven’t gone away.
Oil prices remain elevated compared to pre-escalation levels, and that still poses a medium-term risk to input costs, profit margins and inflation.
As Mohanad Yakout, Senior Market Analyst at Scope Markets, put it in a recent note:
“Oil’s surge is fundamentally a function of supply risk elasticity: when spare capacity is limited and shipping routes are constrained, prices must adjust rapidly to ration potential shortages.”
Higher, stickier energy prices would keep that adjustment in play.
While speaking with Invezz, Yakout also warned that equity weakness in this environment reflects “concern over margin compression and slower global demand should energy costs remain elevated.”
Those concerns don’t vanish because the S&P 500 and Nasdaq managed to get back in for the day; they simply get pushed a bit further out on the horizon until the next data point or geopolitical headline forces a fresh repricing.
Bond markets, meanwhile, are still balancing two opposing forces: growth worries from heightened geopolitical tension, and inflation worries from higher oil.
That tug-of-war means the usual “stocks down, bonds up” safety valve is less reliable than in a plain-vanilla slowdown.
https://invezz.com/news/2026/03/02/sp-nasdaq-back-in-green-why-are-us-stocks-bouncing-back/
