Stock indices closed with a modest rebound yesterday. The S&P 500 gained 1.01%, the Nasdaq 100 added 1.22%, and the Dow Jones Industrial Average rose by 0.83%.

The brief jubilation across global equity markets, fueled by a strong bounce in mega-cap tech names, now appears to be fading. As the European session opened, optimism gave way to a more sober reassessment of risks — foremost among them the escalation in the Middle East. The spike in crude prices triggered by the geopolitical flare-up has acted like a cold shower for upbeat investors.

Recent market chatter about supposed active talks between the United States and Iran to resolve the conflict and avert wider war turned out to be just that — chatter. Tehran's official denial of the reports removed hopes of a quick resolution and renewed pressure on equities. Investors, worried about further deterioration and the economic fallout, have been rotating into more conservative instruments.

That shift in sentiment will inevitably affect market dynamics. The tech sector — which has led the recent bounce — looks vulnerable as investors seek safe havens. Higher energy prices will likely persist, raising inflationary concerns and weighing on consumer spending.

At the moment, futures on European indices are already down about 0.5% after Brent spiked by 4.4% to over $104/bbl — following a 2.8% drop on Monday.

Meanwhile, Asian equities extended gains for a second session after upbeat comments from Nvidia Corp. helped lift tech stocks across the region. Treasuries weakened along the curve, with the 10-year yield up three basis points to 4.24%. Gold rose, marking the first increase in five days.

As noted earlier, the Middle East conflict continues to influence markets, and traders are watching vessel movements through the Strait of Hormuz closely. US President Donald Trump has again urged other countries to help secure the vital waterway and has warned of stepped-up strikes on oil infrastructure. Iran, in turn, attacked a major gas field, further worsening already tight fuel-supply conditions.

As for the S&P 500 technical analysis, buyers' immediate task is to overcome the resistance level of $6,682. This would help the index to gain renewed upside momentum and open the way to $6,697. Controlling $6,711 would further strengthen the bullish case. On the downside, buyers must defend around $6,672. A break below that level would quickly bring the trading instrument back down to $6,660 and could open the path to $6,651.