Here's what a handful of investing professionals say about the market's rapid recovery - and the fragile Middle East truce.
After a wobbly start to trading, the U.S. stock market closed higher Thursday on optimism that a temporary cease-fire agreement in the Middle East might hold - signaling that the worst of the conflict could be over.
The Dow Jones Industrial Average has surged 3.4% over the past two days, while S&P 500, Nasdaq Composite and Russell 2000 indexes each extended their gains to a seventh straight session, according to Dow Jones Market Data.
The Nasdaq's 9.75% surge over its win streak puts the tech-heavy index within striking distance of an exit from correction territory. It officially entered a correction less than two weeks ago on March 30, after it closed more than 10% below its recent peak.
"If you stayed long though this whole thing, you are good," said Mark Malek, chief investment officer at Muriel Siebert & Co.
"But my fear is that people are coming in here thinking this is the slingshot," he added. "Something tells me this market is getting ahead of itself."
Much still hinges on the return of freely flowing shipping and tanker traffic through the crucial Strait of Hormuz, a central focus on day two of the U.S.-Iran cease-fire deal.
U.S. stocks erased earlier losses after NATO Secretary General Mark Rutte said that U.K. Prime Minister Keir Starmer was spearheading an effort to organize a coalition that's able to "collectively ensure" the Strait of Hormuz stays open, including by potentially providing demining equipment, radar technology and frigates.
"Of course, it is early days," Rutte said of the two-week cease-fire deal.
Iran has been charging tolls on select vessels allowed to pass through the maritime chokepoint since Feb. 28, when the U.S. and Israel first attacked the country. Before the outbreak of the conflict, the passage handled a daily average of 20 million barrels of crude oil and oil products.
It's unclear when, or under what terms, that level of traffic might resume. That backdrop saw oil prices bounce back on Thursday, with both the U.S. and global benchmarks climbing toward $100 a barrel. The price action underscored just how uncertain this temporary cease-fire situation feels.
"The story is not over," said Jamie Patton, co-head of global rates at TCW. "We just turned the page to a new chapter."
Patton said the sharp repricing in the Treasury market, based on fears that the Federal Reserve might need to hike interest rates, felt overdone. With oil prices still elevated, albeit off their recent $110- to $115-a-barrel highs, she said risks related to the conflict "are not gone, but we've come off max fears."
Bigger picture, the U.S. economic picture still looks tenuous. Economic growth was revised lower for the fourth quarter, and the longer oil prices stay higher, the worse it will be for households and their ability to keep spending. A risk for markets would be if the Fed stays on hold without cutting rates because of inflation concerns, even if the U.S. labor market weakens further.
Yet that scenario doesn't seem to be the main worry right now. This week's big rally in stocks has been encouraging, but "significant obstacles need to be cleared before a [U.S.-Iran] deal is done," said Mark Hackett, chief market strategist at Nationwide. "A move to new highs will likely require a more tangible outcome than the cease-fire."
Hackett said he'll be closely watching the approaching quarterly earnings season, where consensus is still forecasting double-digit earnings growth. Like the Fed, Wall Street has been reluctant to make any forecast changes based on the uncertainty of war and oil prices.
U.S. benchmark West Texas Intermediate crude for May delivery rose 3.7% to settle at $97.87 a barrel on Thursday. Global benchmark Brent crude for June was up 1.2% at $95.92 a barrel, ending a two-day run of declines, according to FactSet data.
What the cease-fire - which was announced at the 11th hour on Tuesday evening - achieved was "a starting point for negotiations and an agreement to halt hostilities, but not an agreement itself," said Kenny Zhu, energy and commodities research analyst at Global X. But even that understanding seems to have deteriorated, he added.
Dan Boston, lead fund manager at Polar Capital, called the Strait of Hormuz an "interesting conundrum," because it shows how fragile global supply chains have become in a fracturing world order.
That order can now dictate the flow of oil, as well as that of fertilizer ahead of the planting season and critical components in the artificial-intelligence race. In Boston's view, it also adds to his thesis that a rearmament movement around the globe is likely only getting started.
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