The S&P 500, tracked by $SPY, made a lower low yesterday before staging a sharp rebound. The recovery was sparked by President Trump’s proposal to secure shipping through the Strait of Hormuz using U.S. Navy escorts and government-backed insurance. Iran has declared the strait closed, tanker traffic has nearly halted, and commercial insurers have pulled coverage. The announcement triggered aggressive dip-buying, largely driven by momentum traders rather than institutional accumulation.
This morning, stocks pushed higher again on reports of a secret Iranian outreach seeking a possible off-ramp. However, questions remain about the credibility of the report and whether both sides share compatible terms for de-escalation. Uncertainty persists over whether government entities have the authority and financial capacity to insure ships in an active conflict zone.
Overseas volatility continues, with South Korean equities plunging overnight before stabilizing; the $EWY ETF rebounded on the outreach headlines. Meanwhile, ADP payroll data came in at 63K versus 42K expected, offering a modestly positive signal ahead of Friday’s jobs report. Investors are also watching ISM services and the Fed’s Beige Book today.
Defense and safe-haven assets remain sensitive to developments, with $RTX and $GLD in focus alongside broader tech exposure in $QQQ as geopolitical headlines drive short-term swings.
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