Wall Street Rebounds as Oil Retreats, Markets Eye Iran and Hormuz War
US stocks rallied on Monday (March 16th) as Wall Street attempted to recover from a third straight week in the red, helped by a decline in oil prices that eased energy inflation pressures. The Dow Jones Industrial Average rose 517 points (1%), the S&P 500 gained 1.1%, and the Nasdaq Composite added 1.3%, after the S&P 500 closed at its lowest level this year on Friday.
The decline in oil prices was a major driver of sentiment. WTI fell about 4% to below US$95 per barrel after trading above US$100 overnight, while Brent fell more than 1% to around US$101. The decline occurred after US Treasury Secretary Scott Bessent said the US would allow Iranian oil tankers to pass through the Strait of Hormuz, coupled with a Wall Street Journal report that the US would soon announce a coalition of countries to escort ships through the waterway.
Oil's movement is significant because last week's surge—when Brent closed above US$100 for the first time since 2022—was triggered by traffic congestion in Hormuz since the war began. Monday's decline in oil gave riskier assets a boost, as the market assessed the risk of energy inflation not worsening further in the near term, even though supply uncertainty has not disappeared.
At the stock level, gains were led by the technology sector. Meta rose more than 2% after a report—which the company called "speculative"—reported plans to lay off more than 20% of its workforce. Nvidia gained more than 2% ahead of the GTC conference starting Monday, adding to the tech-based index.
On the geopolitical front, markets continue to assess the risk of escalation. President Donald Trump on Friday ordered strikes on Iranian military assets on Kharg Island. While the strikes did not impact oil infrastructure, Trump stated that the US could consider targeting those structures if Iran continues to block the Strait. Trump also said Iran wants a deal, but is not ready yet.
The subsequent market impact will be largely determined by three variables: evidence of the recovery of shipping flows in Hormuz and details of the escort coalition, the direction of oil prices after the sharp correction, and whether the war moves toward de-escalation or instead increases supply risks, raising inflation and depressing equities.
Source: Newsmaker.id
