The S&P 500 has moved back above its pre-strike level, with markets pricing a temporary conflict and possible US–Iran talks. Futures suggest modest further gains.
Brent crude fell -1.61% overnight to $97.76 per barrel. Lower oil prices reduced concerns about a stagflationary shock.
Market Regains Pre Strike Level
The S&P 500 rose +1.02% and closed above its February 27 pre-strike level. The index is up +8.55% from its March 30 closing low.
This marks its second-best 9-session run in the past 4 years. The only stronger 9-session rise followed the bounceback after Liberation Day last year.
Cyclical sectors led, with information technology up +1.72% and financials up +1.73%. Goldman Sachs fell -1.87% after FICC revenue came in below consensus expectations in Q1.
The article was produced using an AI tool and reviewed by an editor.
Options Positioning And Sector Trades
With the S&P 500 up over 8% from its March 30th low, we see call option buying accelerating. The sharp drop in Brent crude to under $98 a barrel is removing the stagflation fears that dominated just two weeks ago. This rapid shift in sentiment suggests that the market now sees the February strike as a contained event, with traders pricing in a higher probability of de-escalation.
Implied volatility has collapsed, with the VIX falling from its late-March peak above 35 to trade near 18 today. This makes buying options much cheaper than it was during the peak panic. Given that a US-Iran deal is still uncertain, purchasing some downside protection through SPY put options for May could be a prudent hedge against any setbacks in the talks.
We continue to favor the leadership from cyclical sectors like technology and financials, which have outperformed. Bull call spreads on the XLK and XLF ETFs offer a defined-risk way to ride this momentum into the heart of the Q1 earnings season. Conversely, with oil prices retreating, we anticipate weakness in the energy sector, making put options on the XLE a compelling pair trade against long technology positions.
This nine-day run is one of the most aggressive we have seen, reminiscent of the sharp bounce we experienced after Liberation Day in 2025. We must also look back to the V-shaped recovery after the initial COVID shock in 2020, which also featured a powerful, volatility-crushing rally off the lows. However, with the upcoming CPI inflation report on April 16th, traders should be prepared for renewed volatility if the data comes in hotter than expected.
