Stocks Rise, Oil Falls as Trump Eases Iran Threats: Markets Wrap
(Bloomberg) — A possible de-escalation in the Middle East conflict rippled through markets, with oil falling and stocks rising as President Donald Trump said he’d postpone strikes on Iranian energy infrastructure after what he described as productive talks toward ending hostilities.
Brent dropped as much as 14% to $96, before paring its decline and hovering near $101 as Iran denied there had been negotiations. The S&P 500 added 1.7%. Treasury yields and the dollar retreated, with traders lightening bets on Federal Reserve tightening while pricing in some easing.
“The market woke up to some potentially good news,” said Chris Larkin at E*Trade from Morgan Stanley. “But follow-through on any relief rally will likely require tangible follow-through on the geopolitical front. We’re still living in a headline-driven market.”
The reversal came after Trump had given Iran until Monday evening New York time to reopen the Strait of Hormuz or face strikes on power plants. Instead, he said on Truth Social that he’d ordered a five-day pause on military action, citing “in-depth, detailed and constructive conversations.”
The abrupt shift caught traders off guard. There had been little sign of diplomatic progress before Trump’s post. Just hours earlier, Israel had launched strikes on Iranian infrastructure and Tehran was retaliating against Gulf nations.
Still, the damage to crude markets may linger well beyond any diplomatic breakthrough. It remains unclear how Iran will respond.
And if talks succeed, reopening the Strait — through which roughly a fifth of global oil supply flows — is unlikely to happen overnight, leaving shipping routes disrupted and energy traders pricing in prolonged supply uncertainty.
“In the span of hours, we’ve seen losses and gains that, if they occurred over five days, would have been considered a volatile week!” said Bespoke Investment Group strategists.
The positive reaction in stocks to a delay on strikes was not surprising given how “oversold” the market had been, according to Jay Woods at Freedom Capital Markets.
“It is impossible to tell whether this signals genuine progress towards an off-ramp for the war, or Trump ‘zig-zagging’ to buy time and keep oil from breaking out towards $150,” said Krishna Guha at Evercore. “It should though offer at least a brief respite on rates – possibly more.”
While it is not hard to see a no-cut scenario for the Fed in 2026, Guha continues to see cuts far more likely than a hike.
“If we can find a durable off-ramp, bond market attention could return to medium term AI-led disinflation,” he said.
Fed Governor Stephen Miran told Bloomberg Television the central bank shouldn’t set policy based on short-term considerations related to the US and Israel’s war in Iran.
Separately, Fed Bank of Chicago President Austan Goolsbee told CNBC he could envision the US central bank needing to raise interest rates, or returning to rate cuts, depending on how the war in the Middle East plays out.
Corporate Highlights:
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Stocks
The S&P 500 rose 1.7% as of 9:55 a.m. New York time The Nasdaq 100 rose 1.9% The Dow Jones Industrial Average rose 1.8% The Stoxx Europe 600 rose 1.3% The MSCI World Index rose 1.4% Currencies
The Bloomberg Dollar Spot Index fell 0.3% The euro rose 0.2% to $1.1592 The British pound rose 0.5% to $1.3405 The Japanese yen rose 0.4% to 158.56 per dollar Cryptocurrencies
Bitcoin rose 4.6% to $71,302.01 Ether rose 5.8% to $2,177.25 Bonds
The yield on 10-year Treasuries declined three basis points to 4.35% Germany’s 10-year yield declined six basis points to 2.98% Britain’s 10-year yield declined eight basis points to 4.91% Commodities
West Texas Intermediate crude fell 9.1% to $89.31 a barrel Spot gold fell 1.1% to $4,441.18 an ounce ©2026 Bloomberg L.P.
