Round trip

US stocks have rebounded sharply after a brief, war-driven correction, with the S&P 500 quickly returning to record highs as investors looked past Middle East risks and falling energy prices.

Earnings results have been stronger than expected, while consumer spending and the labor market remain resilient despite weaker confidence readings. Inflation has picked up at the headline level because of oil, but core inflation is still relatively contained, which supports a patient Federal Reserve.

The main risks are renewed geopolitical stress, sticky energy costs, and any spillover into broader inflation or growth. Even so, the outlook for the second half of the year appears more constructive if oil stays lower and business activity continues to recover.