U.S. stocks experienced a rise on Wednesday while global oil prices saw a decline amid a turbulent trading session influenced by ongoing reports about the conflict in Iran. Late Tuesday evening, news emerged that the U.S. had presented Iran with a 15-point peace plan, sparking optimism among traders and investors that the Trump administration might be making moves to conclude the month-long hostilities in the region. This was confirmed by two regional sources alongside a U.S. official, according to NBC News.
As a result, futures for the S&P 500 and Nasdaq 100 initially surged by over 1%. However, early Wednesday, Iranian media cited anonymous sources claiming that Tehran would reject any ceasefire offer and would not engage in negotiations with the U.S. These reports briefly impacted the index futures, pushing them down from their previous highs and causing a lift in oil prices from their early morning lows. Despite this setback, trading commenced with the S&P 500 climbing about 1%, the Nasdaq Composite increasing by 1.2%, and the Dow advancing by 575 points. The Russell 2000 also rose approximately 0.5%.
The price of U.S. crude oil plummeted more than 4% during morning trading, settling around $88 per barrel. Since the commencement of the war on February 28, West Texas Intermediate (WTI) crude oil prices have surged over 30%, with a 50% increase recorded since the beginning of the year. International Brent crude prices also fell, hovering around $100 per barrel. Analysts at Citi remarked that a single headline could significantly sway oil prices and Treasury yields, highlighting the current volatility in the stock market.
Adding to the complexity, Pakistan has expressed willingness to mediate discussions aimed at ending the hostilities, with sources indicating that the country has been relaying messages between the U.S. and Iran for the past two days. There is potential for an in-person meeting between officials from both nations in the coming days. Meanwhile, President Trump’s communications have oscillated, with conflicting statements regarding U.S. military actions and the state of the conflict.
On March 16, Trump announced a postponement of his planned visit to China to monitor the situation, while on March 23, he asserted that the Strait of Hormuz would “soon” be open. Nevertheless, he declared on Tuesday that “this war has been won” during a press briefing in the Oval Office, even as sources reported the deployment of over 1,000 additional U.S. troops to the Middle East.
The financial markets have experienced rapid fluctuations in response to these developments. Analysts at ING noted high levels of uncertainty, stating that while volatility remains elevated, ongoing tensions are likely to bolster prices and heighten inflation concerns, which might prompt central banks to maintain interest rates rather than implement cuts.
Traders anticipate that the European Central Bank and the Bank of England will likely increase interest rates amid the turmoil. Despite the chaos, UBS Global Wealth Management’s chief economist Paul Donovan observed that investors seem eager to focus on positive developments—that is, the proposed peace plan—ignoring Iranian rejections and the currently limited passage through the Strait of Hormuz.
In recent weeks since the war’s onset, U.S. oil prices have only closed lower in four of the 17 trading sessions, while the S&P 500 has seen gains on just six occasions, three of which were marginal. The outlook for the indices was bleak prior to Wednesday’s session, with the S&P 500 and Nasdaq projected to suffer their worst monthly performances in a year. The Dow was anticipated to face its most significant monthly decline since September 2022, with both indices down over 6% and 4% respectively since the conflict began.
The Strait of Hormuz, which normally facilitates 20% of the world’s oil supply, has been largely inactive since the outbreak of hostilities. Recent data revealed that only a handful of vessels traversed the strait, with reports indicating a generally tight regulation of traffic by Iranian authorities, particularly as some ships have taken unusual routes close to the Iranian coast. Two Indian vessels reportedly received passage following negotiations with Iran, although numerous other ships laden with various cargo types, including oil and liquefied natural gas, remain stranded.
