The rebound in US equities continued on Wednesday as traders grew optimistic about US military operations in Iran ending soon and a batch of strong data showed resilience in the world's largest economy.
The S&P 500 Index closed 0.7% higher, while the Nasdaq 100 Index jumped 1.2%. The moves build on a Tuesday rally where US equities had their best day since May. Oil prices retreated. Meanwhile, SpaceX has filed confidentially for a widely anticipated initial public offering, according to people familiar with the matter.
Investors await remarks from President Donald Trump Wednesday evening in a prime-time address, where he's expected to hail his military campaign in Iran as a success and stress that the conclusion of operations may come in two to three weeks, according to a White House official.
The US stock market has settled into a pattern where it starts the week strong only to drop on Thursdays and Fridays, so the president's speech is likely to dictate whether the recovery in equities can hold on.
“Don't try to time markets,” said Phillip Neuhart, head of market and economic research at First Citizens Bank. “You can get positioned the wrong direction very easily. I think some of the late-week selling has just been that folks did not want to be positioned for risk going into the weekend.”
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Trump has sown confusion among traders with his messaging around the war; in private, he reportedly told aides that he's intent on withdrawing soon, while in a Wednesday morning social-media post, he said he'll only consider a halt to attacks on Iran when the Strait of Hormuz is reopened.
Iran expressed willingness to end the conflict in the previous session, but on Wednesday the Islamic Republic said it won't reopen the key transport passage based on “absurd displays of the American president.”
Trading desks at Wall Street's biggest banks from Goldman Sachs Group Inc. to JPMorgan Chase & Co. suggested the sharp rise in stocks is a squeeze driven by extremely bearish positioning in equity markets going into the end of the quarter rather than a shift in investor sentiment over the war.
Investors also parsed a bevy of strong economic data in early trading. US retail sales rebounded by more than forecast in February as consumers stepped up spending, while American companies added more jobs than expected last month, a sign that the labor market may be stabilizing.
High volatility has historically been a good entry point for stocks: the S&P 500's three-month returns have been strongest when the Cboe Volatility Index, or VIX, sits in its top historical quintile, as it does now, according to data from Bloomberg Intelligence compiled by strategists Christopher Cain and Rahul Jain.
Dating back to 2000, the S&P 500 has seen an average 4.4% forward three-month return in the top quintile, well above the 2.15% average following lower-volatility periods.
In individual movers, Nike Inc. slid 16% — its worst day since June 2024 — after the sportswear company said it expects revenue for the fourth quarter to be down 2% to 4%, noting that its turnaround efforts are taking longer than originally planned. RH plunged 19% after the home furnishing company forecast revenue for the first quarter that missed the average analyst estimate.
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