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 the move and hovering near $102 as Iranian media reported there hasn’t been any communication with the US. The S&P 500 added 2%. 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. Both sides are keen to “make a deal,” he told reporters on Monday, adding that there are already “major points of agreement.”
“I just want to have as much oil in the system as possible,” Trump said, adding that prices will “drop like a rock” once a deal is achieved.
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 — a vital waterway for oil and gas 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:
Pfizer Inc. said its experimental Lyme disease vaccine was 73% effective against the tick-borne illness, a lackluster result as fewer-than-expected infections in the pivotal study made its potency hard to evaluate. Wall Street banks led by JPMorgan Chase & Co. have kicked off the sale of $8 billion in junk bonds to fund the record leveraged buyout of video game maker Electronic Arts Inc. Fannie Mae and Freddie Mac have begun placing sizable orders to purchase mortgage-backed securities, stepping into a market roiled by widening bond spreads and a surge in volatility, according to a person with direct knowledge of the matter. DraftKings Inc. and Flutter Entertainment Plc rose as the Wall Street Journal reported US senators are set to introduce bipartisan legislation to ban sports bets on prediction markets. Activist investor Elliott Investment Management has made a multibillion-dollar investment in Synopsys Inc. and plans to push for changes at the chip-design software maker, according to people familiar with the matter who asked not to be identified because it was private. Some of the main moves in markets:
Stocks
The S&P 500 rose 2% as of 11 a.m. New York time The Nasdaq 100 rose 2.1% The Dow Jones Industrial Average rose 2.2% The Stoxx Europe 600 rose 1.9% Currencies
The Bloomberg Dollar Spot Index fell 0.6% The euro rose 0.4% to $1.1623 The British pound rose 0.8% to $1.3446 The Japanese yen rose 0.5% to 158.47 per dollar Cryptocurrencies
Bitcoin rose 4.7% to $71,368.01 Ether rose 5.8% to $2,178.61 Bonds
The yield on 10-year Treasuries declined four basis points to 4.34% Germany’s 10-year yield declined seven basis points to 2.98% Britain’s 10-year yield declined 12 basis points to 4.87% Commodities
West Texas Intermediate crude fell 9% to $89.38 a barrel Spot gold fell 0.4% to $4,476.02 an ounce ©2026 Bloomberg L.P.
