Don't trust your eyes, trust your ears. When markets can't decide what to trade — oil shocks, stagflation fears, or FOMO (Fear of Missing Out) — a soundbite from Donald Trump becomes a lifeline. The S&P 500 found a bottom and bounced from late-November lows after the US president said the Middle East conflict would end soon.

The US–Israel–Iran standoff wiped about $6 trillion off global equity market capitalization. Yesterday's winners in Asia turned into the biggest losers. Money is rotating back to the United States — not just because the US market is the deepest and most liquid, but because the American economy, with roughly 415 million barrels in strategic oil reserves and increased drilling activity as Brent and WTI move higher, looks better positioned to weather an energy shock.

Global market capitalization dynamics

That said, JP Morgan has turned strategically bearish on the S&P 500 until the Middle East conflict ends. Yardeni has raised the probability of a broad market crash in 2026 from 20% to 35%. The odds that the index will rise purely on crowd exuberance have fallen from 20% to 5%.

The market was rescued once again by Trump's soundbite, but armed conflict ends at the negotiating table — and Iran has warned the two prior attempts at dialogue with the US, in summer 2025 and winter 2026, ended with strikes. More talks? Not likely.

US stock index performance

Sure, Trump could at any moment declare US objectives met and say strikes will stop. But would the market view that as a victory short of Tehran's full capitulation? The parties have no shared ground, so the conflict is more likely to continue than to end. If so, the S&P 500's bounce off local lows looks temporary.

Stagflation risks are growing fast, which will constrain the Fed and other central banks from easing policy. And keeping rates high will add pain to economies already shaky from soaring oil prices.

On the other hand, three straight years of 10%+ rallies in the S&P have trained the crowd to reflexively buy dips. FOMO (Fear of Missing Out) is still priced in, so any positive trigger sparks rallies in the broad index.

Technically, the S&P 500 daily chart shows a wide-range bullish engulfing bar. The odds of a continued move toward fair value around 6,870 are rising. However, the market's fate hinges on bulls' ability to consolidate above the key pivot at 6,770. If they do, it would be wise to focus on buying. If the price slips back below the support level, it will be a reason to sell.