After 1:00 AM, the world thought it was saved.

Ask AI · Why is the market rebound only a brief calm amid the storm?

Source: Wall Street Intelligence Circle

Currently, the market is betting that the war will end soon, but this bet carries extremely high risks.

After 1:00 a.m., the market was saved:

• U.S. stocks and gold rebounded at the close, but both still closed lower, with gold dropping $200.

• The upward momentum of oil faded. Brent crude surged to $119 at one point, then retreated, ultimately closing around $107.

• The US Dollar Index accelerated its decline, falling in one day by the equivalent of a week’s gains.

On one side, oil prices turned down; on the other, the dollar accelerated its fall. The entire market finally exhaled.

First, yesterday’s market movements can be divided into three phases:

· Before the opening of the U.S. stock market: oil prices surged, while everything else declined (the Middle East conflict spread to the oil and gas lifeline), and it was a sharp decline, with gold briefly plunging over $300;

· After the U.S. stock market opened: good news kept coming (reports suggesting the possible lifting of Iran oil sanctions, denial of export bans, and allowing Russian oil to flow), easing the downward pressure;

· As the U.S. stock market approached closing: the market further rebounded (Trump said the war would “end soon,” and Israeli Prime Minister Netanyahu stated he would help the U.S. open the Strait of Hormuz). Although Netanyahu was signaling positive prospects for “opening the strait,” the reality is far more complex. Even if the strait is physically open, as long as Iran’s missiles are still being launched, global insurance giants will refuse to underwrite, or premiums will be so high that transporting oil becomes unprofitable.

However, despite the easing of the selloff at the close, most markets still ended down (the S&P 500 Index failed to reclaim the 200-day moving average), which will dampen market sentiment on Friday. Investors are even less willing to hold positions over the weekend (the late-session rebound is essentially “pre-emptive trading of expectations,” not the fulfillment of what Trump and Netanyahu said). Friday remains a special day—“Triple Witching Day,” with $57 billion in options expiring soon. This will push the market by “technical forces,” potentially amplifying volatility (irrational surges or sudden stampedes). The price action on Friday has low predictive value but high destructive potential.

Furthermore, there are no signs of de-escalation in the war. Even after Trump called for restraint, Iran continued attacks on energy assets. Citing sources familiar with the matter, Bloomberg reported that the Pentagon has requested an additional $200 billion from Congress to cover costs related to Iran-related conflicts. Such a massive funding request indicates that the U.S. is preparing for a prolonged war.

Fourth, oil prices remain the key switch for the global market. As long as oil prices continue to fluctuate violently, the market cannot truly settle. The so-called rebound is merely a brief calm within the storm.

It is also important to note that the market has begun pricing in the possibility that the Federal Reserve in 2026 may not cut interest rates, and the likelihood of rate cuts before mid-2027 is extremely low. This outlook is more significant than any daily fluctuations.