So, the stock market had another down day Thursday. The S&P 500 fell 0.27% to close at 6,606.49, marking its second straight decline. But here's the interesting part: it didn't stay down there. The index staged a sharp recovery off its session lows, and the catalyst came from an unexpected place—a diplomatic comment from Israeli Prime Minister Benjamin Netanyahu.

Netanyahu said Israel was helping the U.S. open the vital Strait of Hormuz and suggested the ongoing conflict might end sooner than many fear. In the world of market-moving headlines, that's a pretty direct signal. It was enough to send oil prices tumbling and give stocks a late-session lift.

Heading into Friday, the crowd on the Polygon-based prediction platform Polymarket (POL) is leaning bullish. Their market asking "S&P 500 Opens Up or Down on March 20?" is currently showing 62% betting on "Up" and 38% on "Down," with about $10,964 in early trading volume. It's not a huge sum, but it's a sentiment gauge worth watching.

Why the Diplomatic Chatter Moved Markets

Netanyahu's comments did what good news sometimes does: they changed the mood instantly. West Texas Intermediate crude oil fell sharply in post-settle trading after he spoke. For a market worried about supply disruptions and spiking energy costs, that's a relief. This was the clearest diplomatic signal the market has received since this conflict began nearly four weeks ago.

Adding some heft to the optimism, six G7 allies—the U.K., France, Germany, Italy, the Netherlands, and Japan—issued a joint statement Thursday expressing their readiness to help ensure safe passage through the Strait. It suggests a framework for a resolution might actually be forming.

The numbers show the impact. WTI crude futures fell below $94 per barrel on Friday after climbing as high as $101 in the previous session. Brent crude futures were below $107 after surging toward $120. That's a meaningful pullback.

The Case for Staying Cautious

But before you get too excited, let's look at the other side of the trade. The S&P 500 is still down about 0.4% for the week, putting it on pace for its fourth straight losing week. That's not a great trend.

More importantly, the fundamental risks haven't vanished. Even after Thursday's drop, WTI crude is still up more than 48% this month. That's a huge move that will eventually filter through to costs for businesses and consumers.

And the geopolitical situation remains tense. Iran struck Qatar's liquefied natural gas export facility this week and is threatening further attacks on energy infrastructure across Saudi Arabia, the UAE, and Qatar. These aren't minor events. QatarEnergy's CEO, Saad al-Kaabi, told Reuters that the attacks have knocked out 17% of Qatar's LNG export capacity. That translates to an estimated $20 billion in lost annual revenue and threatens supplies to Europe and Asia.

So, Netanyahu's comments eased fear, but the Strait of Hormuz is still largely closed. The physical blockage and threat of further attacks are very real problems.

As of early Friday, around 2:56 AM ET, S&P 500 futures were down a slight 0.06% at 6,655.75. It's a muted signal ahead of the open.

For what it's worth, the Polymarket crowd got it right on Thursday. Their "Down" bet resolved correctly when the S&P 500 opened at 6,583.12, below Wednesday's close of 6,624.70. That session started under pressure from the prior day's hot Producer Price Index data and cautious Federal Reserve commentary. Total traded volume on that market was $188,635.

The bottom line? Traders are betting on a Friday rebound based on hopeful diplomatic news. But with oil prices still elevated, a key shipping lane still blocked, and the market facing a potential fourth weekly loss, the path higher isn't exactly clear.