The S&P 500 slipped on Wednesday as renewed hostilities between the U.S. and Iran pushed oil prices sharply higher, but Polymarket traders are betting the benchmark index will rebound at Thursday’s open.
The S&P 500 closed down 0.28% at 7,482.71. However, the July 9 Polymarket contract implied an 85% probability that the index would open higher on Thursday.
Why That Number Matters
Markets have quickly shifted from focusing on AI earnings and economic data back to geopolitics, with the latest escalation in the Middle East driving a sharp rally in crude oil and reviving inflation concerns.
Minutes from the Federal Reserve’s June meeting also showed policymakers remain divided on the path for interest rates, reinforcing expectations that rates could stay higher for longer unless inflation shows clearer signs of easing.
Investors will now turn their attention to Thursday’s weekly jobless claims report, existing home sales data and PepsiCo‘s (NASDAQ:PEP) earnings for fresh clues on the health of the U.S. economy.
The Bull Case
Despite Wednesday’s decline, futures turned modestly higher overnight as investors looked beyond the immediate geopolitical shock. S&P 500 futures edged 0.32% higher early Thursday.
However, renewed Middle East tensions remain the biggest near-term risk for equities.
The U.S. launched fresh strikes on Iran after attacks on commercial vessels near the Strait of Hormuz, while President Donald Trump said he was no longer interested in negotiating with Tehran and described the ceasefire as “over.” Brent crude surged more than 5% on Wednesday, raising concerns that higher energy costs could keep inflation elevated and force the Federal Reserve to maintain restrictive monetary policy for longer.
“The latest turn of events in the Middle East has reversed the short-term bearish outlook for oil prices. But the immediate upside pressure could be less severe than what we saw in the first weeks of the war,” said Swissquote Senior Analyst Ipek Ozkardeskaya.
How The Previous Bet Played Out: The S&P 500 opened Wednesday at 7,476.54, below Tuesday’s close of 7,503.85, meaning the July 8 Polymarket contract resolved “Down.” The contract recorded about $63,885 in traded volume before settling.
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