The S&P 500 suffered its steepest one-day decline in a month on Thursday as surging oil prices and earnings from Tesla Inc. (TSLA) and Alphabet Inc. (GOOGL) rattled investors, but Polymarket traders are betting the benchmark index will rebound at Friday's open.
The S&P 500 closed down 1.21% at 7,408.30 after opening at 7,418.29, marking its worst daily performance since June 23. Despite the selloff, the July 24 Polymarket contract implied a 66% probability that the index will open higher on Friday.
Why That Number Matters
Thursday's decline marked the S&P 500's worst single-day performance in a month as markets grappled with renewed geopolitical risks and fresh concerns over artificial intelligence spending following Alphabet's earnings.
Brent crude briefly topped $100 per barrel for the first time since late May after attacks on Saudi oil tankers in the Red Sea reignited fears of supply disruptions. Treasury yields also climbed, with the benchmark 10-year yield briefly rising above 4.7%, prompting traders to increase expectations of another Federal Reserve rate hike later this year.
The Checks and Balances
Despite Thursday's sharp decline, Polymarket traders remain optimistic that markets could stabilize after an earnings-driven selloff rather than a deterioration in broader economic fundamentals. S&P 500 futures climbed 0.11% early Friday.
Oil prices were only modestly higher in Friday's Asian session after Thursday's surge, while European markets opened broadly higher. Investors will also look for bargain buying following steep declines in mega-cap technology stocks, particularly after Tesla shares recorded its worst session since March 2025.
Still, the backdrop remains challenging. Geopolitical tensions remain elevated after Yemen's Iran-backed Houthis claimed attacks on two Saudi oil tankers in the Red Sea. President Donald Trump also warned the U.S. would strike Iranian infrastructure if Tehran targeted shipping in the Strait of Hormuz again, adding to concerns that higher energy prices could keep inflation elevated and delay interest-rate cuts.
How The Previous Bet Played Out: The July 23 Polymarket market launched only shortly before the opening bell and attracted about $10,000 in trading volume. The S&P 500 opened at 7,418.29, well below Wednesday's close of 7,498.96, meaning the contract resolved "Down." For context, the July 22 contract attracted materially higher participation before markets turned sharply lower the following session.
