Wall Street opened mostly flat on Monday, with small movements in major indices. At 9:30 AM ET, the Dow Jones rose 210.49 points to 45,377.13, up 0.47%. The S&P 500 gained 13.70 points to 6,382.55, rising 0.22%. Meanwhile, the Nasdaq slipped 8.86 points to 20,939.50, down 0.04%.
The rise in the Dow came after President Donald Trump said there is hope for ending the war with Iran. “The United States of America is in serious discussions with A NEW, AND MORE REASONABLE, REGIME to end our Military Operations in Iran,” Trump said in a post on Truth Social on Monday.
However, he also warned that if a deal is not reached soon, strong action could follow.
“Great progress has been made,” Trump said, but added that if a peace deal is not reached “shortly” and the Strait of Hormuz is not “immediately” reopened, the US will “conclude our lovely ‘stay’ in Iran by blowing up and completely obliterating all of their Electric Generating Plants, Oil Wells and Kharg Island (and possibly all desalinization plants!), which we have purposefully not yet ‘touched.’”
This follows his earlier statement that Iran had accepted most of a US 15-point plan and agreed to allow more oil ships through the Strait.
Markets remain cautious
Even with this optimism, experts say markets are still uncertain. “We still have this mindset that this is transitory, that somehow, yes, there’s going to be a short-term effect, but we should look through it,” Mohamed El-Erian told CNBC.
He also warned about limited policy options. “There’s a real question mark as to what the Fed is going to do, and we’re already running a 6% deficit,” he said. “The market hasn’t quite realised that if this goes on, the policy offsets much less than what we’ve had before.”
Oil prices rise and add pressure
Oil prices moved higher at the start of the week. Brent crude rose more than 2% to above $115 per barrel, while West Texas Intermediate was also up over 2% to above $102. Higher oil prices have raised concerns about inflation and economic slowdown. El-Erian warned that things could worsen if supply issues emerge.
“The next tipping point economically speaking would be ‘physical shortages,’” he said. “If we start seeing that in Asia, that will impact the US. They will now import higher products in terms of prices, and the question is do we now see also a disruption in the availability of products?”
Markets coming off a weak week
Wall Street is entering the week after a weak performance. The Dow, Nasdaq, and S&P 500 all fell for the fifth straight week, with the Dow and Nasdaq entering correction territory.
Analysts say the situation in the Middle East is still a key risk. “Markets remain very much on edge about the Middle East, and the consensus view is still that the conflict is set to escalate,” analysts at Vital Knowledge told Investing.com
Fed outlook
Rising oil prices have also pushed up bond yields, adding pressure on stocks. Traders are no longer expecting any interest rate cuts from the Federal Reserve this year, compared to earlier expectations of two cuts. Key economic data, including jobs numbers, will be released this week. Fed Chair Jerome Powell is also set to speak later in the day.
Some experts believe Monday’s gains may not last.
“The S&P 500 is still down less than 10% (since the war began). In many ways, investors have been affected less by the implications of the Strait of Hormuz being closed than I would have thought,” said Sam Stovall, chief investment strategist at CFRA Research to Reuters.
“Today’s action is probably more of a technical bounce because many sectors and sub-industries are in oversold condition.”
Markets will be closed on Friday for Good Friday, though the March jobs report will still be released the same day.
Iran War: How It’s Repricing Global Markets
PRESSURE CHAIN — AS OF APRIL 1, 2025
Trigger
Iran War & Strait of Hormuz Risk
Trump warns of escalation if deal not reached; Strait of Hormuz remains under threat, disrupting ~20% of global oil flow.
Oil Surge
Brent & WTI Crude Jump 2%+
Supply disruption fears push crude sharply higher at the start of the week.
Inflation Risk
Physical Shortage Fears Emerge
Experts warn that if supply disruptions spread to Asia, higher import prices could hit the US economy hard.
Fed Policy
Rate Cut Expectations Wiped Out
Traders have abandoned hopes of Fed rate cuts as bond yields rise on higher oil prices.
Market Impact
Wall Street: Mixed Open, Caution Prevails
Dow and Nasdaq in correction territory. Today’s gains seen as a technical bounce from oversold conditions.
“The next tipping point economically speaking would be physical shortages. If we start seeing that in Asia, that will impact the US.”
— Mohamed El-Erian, Economist
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.