Trump is on edge about the Israel-Iran ceasefire, but markets are celebrating
President Donald Trump appears to still be on edge from the conflict that unfolded between Israel and Iran over the last several weeks, but the market appears eager to resume its rally toward record highs.
Trump said Israel and Iran had agreed to a ceasefire on his Truth Social account Monday evening — news that was welcomed by investors, even as the president fired off a series of posts on Tuesday urging Israel to stick to the agreement he brokered.
Still, after confronting the prospect of a much wider regional conflict, investors seemed ready to celebrate a win for the market.
Here's where major indexes stood at 11:45 a.m. ET on Tuesday:
S&P 500: 6,084.14, up 0.98%
Dow Jones Industrial Average: 43,008.17, up 1% (+426.39 points)
Nasdaq 100: 19,905.52, up 1.4%
Investors have been fretting for more than a week over the economic implications if tensions in the Middle East were to escalate. But for now, the cease-fire appears to have lifted their spirits, according to David Morrison, a senior market analyst at Trade Nation.
"So, with the immediate geopolitical tensions dialled down, investors are free to focus on President Trump's trade war and the first tariff deadline coming up in a couple of weeks," Morrison wrote in a note on Tuesday, adding that he believed stocks were still in a bull market.
"As far as investors are concerned, they've just stared down the prospect of World War Three, so they're not going to be fussed by a few percentage points on US imports," he added of tariff risks.
"This de-escalation is leading investors to be more comfortable engaging in risk-on trades in the equity market. Even if there is further escalation, it appears that Iran has limited abilities to retaliate, which is strengthening expectations that this conflict will calm down," Chris Brigati, the chief investment officer at SWBC, said in a statement.
Oil prices, which spiked as tensions in the Middle East escalated, dropped sharply from their recent highs.
Brent crude, which spiked as much as 14% amid the 12-day conflict, traded 4% lower on Tuesday at around $65 a barrel.
West Texas Intermediate crude, which spiked as much as 10% over the same period, also fell 4% to trade around $65 a barrel, below levels on the day the conflict started.
The declines are signs that oil markets are no longer fretting over possible supply disruptions in the Middle East, according to Alex Kuptsikevich, the chief market analyst at FXPro.
"Retreating to levels seen before the latest conflict, the price recouped the 'war premium,'" Kuptsikevich wrote in a note on Tuesday.
Here are other important moves in the market:
The US Dollar Index: 97.90 (-0.53%)
Bitcoin: 105,662.80 (+0.21%)
Gold: 3,319.60 (-2.22%)
Investors, though, are still on watch for signs that conflict could re-escalate in the coming days.
"Markets breathed a sigh of relief following Trump's ceasefire declaration, but the celebration could be short-lived. If tensions flare again or the ceasefire is violated, we could see a swift return to risk aversion — boosting safe havens like gold and pressuring global equities," Lukman Otunuga, a senior market analyst at FXTM, wrote in a note.
"In our downside scenario, we assume ceasefire negotiations break down and Iran attempts to disrupt trade with mines and attacks on shipping," researchers at Oxford Economics wrote in a note.
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