Monday was the kind of day that makes investors question everything they think they know about markets.
Oil crossed $107 a barrel when futures markets opened Sunday night — and kept climbing. By early Monday morning, WTI crude briefly touched nearly $120 per barrel, its highest price since Russia invaded Ukraine in 2022. Dow futures were down more than 1,000 points, or about 2%. S&P 500 futures fell 2%. Nasdaq futures dropped 2.3%. The VIX — Wall Street's fear gauge — jumped above 30 for the first time since last April's tariff-induced spike.
The trigger: Kuwait confirmed production cuts as oil storage in the region reached capacity, while Iraqi output had plunged roughly 70%. With the Strait of Hormuz still effectively blocked, Schwab noted that hedge funds appeared to be betting on further pressure, with hedging activity spiking across sectors.
Two things changed the picture. First, the Financial Times reported that G7 nations were weighing a coordinated release of emergency oil reserves — potentially covering more than 400 million barrels. Oil started pulling back. Then, late in the session, President Trump told reporters the military campaign was "very complete, pretty much" and that the U.S. was focused on keeping "energy and oil flowing to the world."
Markets didn't wait for details. The Nasdaq closed up 1.38%, the S&P 500 gained 0.83%, and the Dow added 0.50%. The Russell 2000 — small-cap stocks most sensitive to rate expectations — climbed 1.12% back into positive territory for the year. WTI crude settled at $94.77, then fell another 9% in after-hours trading as Trump's comments sank in.
Northwestern Mutual chief portfolio manager Matt Stucky captured the session in one sentence: "This is just a real clear indication that oil's in the driver's seat in the near term."
The problem is that "very complete, pretty much" isn't the same as over. Iran struck Bahrain's Bapco oil refinery for the second time in 24 hours after the close. G7 energy ministers were set to meet Tuesday morning. CPI data lands Wednesday.
The market's Monday comeback was real. Whether it means anything lasting depends on a war that isn't finished yet.