S&P and NASDAQ indices erase war declines and close higher on the dayReports of disruptions in the Strait of Hormuz is sending oil prices back higherTrump; US continues to carry out large scale combat operations in IranGold’s "Blow-off Top": Geopolitical Spike Meets Technical ResistanceISM Manufacturing PMI for February 52.4 versus 51.8 estimateS&P Global manufacturing PMI for February 51.7 versus 52.0 estimateWhat are the central bankers talking about as war ragesUS Sec of War Hegseth: Iran cannot have nuclear weapons and takes guts to enforce thatinvestingLive European markets wrap: Oil stays bid, dollar firms on US-Iran conflictSwiss franc tumbles after SNB warning earlierStocks recover as war headlines collide with strong data and rising oilUS equities staged a notable comeback into the close, with the S&P 500 and NASDAQ erasing early war-driven declines as traders balanced escalating geopolitical risks against resilient economic data and continued sector rotation beneath the surface.Early in the session, risk assets came under pressure following reports of disruptions in the Strait of Hormuz, a critical global energy chokepoint. The headlines helped send crude oil sharply higher, reinforcing fears of supply disruptions and broader regional escalation as the US continues large-scale combat operations in Iran, according to comments from former President Trump.Despite the initial risk-off reaction, equities gradually stabilized and turned higher as the session progressed, suggesting investors remain willing to buy dips even amid heightened geopolitical uncertainty.Oil surge and geopolitics drive cross-asset moves The USD moves higherEnergy markets remained at the center of trading activity. Reports of navigation disruptions and threats to shipping traffic through the Strait of Hormuz pushed oil prices higher, reviving inflation concerns while simultaneously supporting energy shares and defense-related industrial companies.US Secretary of Defense Pete Hegseth reinforced the geopolitical tone, stating that Iran cannot be allowed to obtain nuclear weapons and that enforcement requires resolve, underscoring the market’s perception that tensions may remain elevated.The geopolitical premium also influenced global markets earlier in the day, with European trading seeing oil bid and the US dollar firm as investors sought relative safety in US assets.Looking at the changes of the USD. The USD was higher vs all the major currencies with the CHF being the biggest decliner vs the USD. The Swiss National Bank issued warnings earlier that signaled discomfort with currency strength, prompting traders to unwind defensive positioning despite rising global tensions.CHF -1.39%EUR -1.04%NZD -0.94%JPY -0.84GBP -0.63%AUD -0.38%CAD -0.23%Economic data signals continued expansionAgainst the backdrop of geopolitical stress, US economic data painted a relatively constructive growth picture.ISM Manufacturing PMI: 52.4 vs 51.8 expectedS&P Global Manufacturing PMI: 51.7 vs 52.0 expectedThe ISM reading, in particular, reinforced the view that US manufacturing activity remains in expansion territory, helping equities recover from early losses and supporting the soft-landing narrative. Of concern was that the ISM Prices Paid did rise to 70.5 vs 59.0 last month.Gold spikes into technical resistanceGold initially surged on safe-haven demand tied to war headlines. At session highs, the price was up $140. The price did come off into the close and is trading up $50 or 0.94% at $5327. The move carried characteristics of a geopolitical-driven blow-off top, where panic buying met profit-taking as risk sentiment stabilized later in the session.Central banks remain cautious amid uncertaintyEven as geopolitical risks intensified, central bank commentary continued to focus on inflation persistence and policy patience. Officials broadly emphasized data dependency, highlighting the challenge of balancing still-firm economic activity against risks that energy-driven price pressures could complicate the inflation outlook if oil remains elevated.Market takeawayMonday’s price action reflected a market attempting to reconcile two competing forces:Rising geopolitical risk and higher oil pricesResilient economic data and dip-buying behaviorThe ability of major US indices to erase steep early declines and close higher suggests investors are not yet positioning for a sustained risk-off regime, though sector leadership — favoring energy and defense while consumer sectors lag — signals a more cautious and selective risk environment. This article was written by Greg Michalowski at investinglive.com.