Trump’s Iran War Signals Move Markets as Oil, Stocks Wobble

The war with Iran is “pretty much complete,” he told CBS.

The S&P 500 jumped 0.5% in the blink of an eye and was up 0.5% at the close of trading for the day. The index was on track to close the day with losses. Instead, it posted a 0.8% gain, its best single-day performance in more than a month, and oil prices fell back below $90 a barrel.

Then, at a press conference around 5:30 p.m., Trump responded. The war was not about to end, but rather sooner than expected, he stated.

It was reminiscent of how Trump backtracked on the maximalist version of his tariff campaign last April, after the stock market plunged and the bond market trembled.

“He cares about the markets. He cares, in particular, about the stock market. It makes sense that he would want to calm fears,” said Kristina Hooper, chief market strategist at Man Group, an investment manager.

But there are differences, Hooper noted, between the stock market’s decline and its subsequent recovery in response to Trump’s tariff measures and the tumult stemming from the war with Iran. Even if he says the war is over, Iran could continue fighting. U.S. stocks have held steady, falling slightly on Tuesday even as Iranian officials maintained defiant statements about the conflict.

“I think there’s a really bullish bias in the markets,” Hooper said.

Still, for many households, actions aimed at calming markets — or driving them to new highs — don’t create the kind of relief Americans have been clamoring for on health care, housing or the overall cost of living. Instead, Trump’s tariffs (and, most likely, rising oil prices) have worsened inflation and eroded consumer confidence, economists say.

“The stock market doesn’t solve consumers’ problems. It doesn’t solve a lot of our problems,” said Michael Kantrowitz, chief investment strategist and head of portfolio strategy at Piper Sandler, an investment bank.

The maxim that “the stock market is not the economy” was especially popular between 2023 and 2025: the S&P 500 index was enjoying a good streak of all-time highs. But in each of those years, consumer sentiment was dour. Households and smaller businesses struggled with higher prices, and workers struggled with a slowly weakening labor market that by 2025 was adding few jobs outside of health care.

This year the disconnection has ended. Investors are also nervous.

At first, it was due to concerns about artificial intelligence and the overvaluation of technology stocks. Now, investors are trying to value the negative financial effects of the war. And for the first time in a long time, the stock market seems to be reflecting the country’s bad mood: It’s flat.

The S&P 500 has fluctuated between up and down one percentage point since the beginning of the year. Stocks recovered some losses after Trump’s dovish comments on Monday, although he later said the strikes could continue.

Oil prices have cooled somewhat but remain elevated, near $90 a barrel, compared to $60 levels last month. Economists expect inflationary impacts on airfares, restaurants, gasoline prices and other products.

Henrietta Treyz, director of economic policy at Veda Partners, an investment research firm, said the president often remained focused on the priorities of his first term: cutting taxes, deregulating industry and “using his bully pulpit” to influence investments and corporate deals.

But now, Treyz said, “the American public is worried about affordability, housing, high electricity prices and high grocery bills.”

One challenge for the White House, now that stocks are stable, is that the administration has pointed to rising stock valuations as an indicator of an increasingly healthy business environment driven by its fiscal and regulatory policies.

But most Americans disapprove of the way Trump has handled the economy. And it is unclear to many analysts to what extent recent economic growth is the result of their policies rather than a confluence of forces, including technological investments in artificial intelligence and the nascent productivity gains derived from it.

“There is a strange combination of low labor market growth and strong overall growth, but I wouldn’t link any of that to tax cuts and deregulation,” said Padhraic Garvey, head of research at ING, the global investment bank.

A ‘problem from the beginning’

During his State of the Union address in February, Trump acknowledged that there were limits to making economic policies based on boosting markets to boost growth.

“Because the stock market has done so well, setting all those records, their 401(k)s are way up,” he said. “Yet, half of all American workers still do not have access to an employer-matched retirement plan.”

As a solution, Trump promised in the speech, in the absence of further details, that next year the administration would give “these often forgotten workers” “access to the same type of retirement plan offered to all federal workers,” with up to $1,000 each year in federal contributions “while ensuring that all Americans can benefit from a rising stock market.”

Even if such a plan gained support in Congress, by its nature it would not offer the more immediate financial relief that many households are seeking.

“This was the problem all along,” said Neil Dutta, head of economics at Renaissance Macro Research. “Even last year’s big tax bill wasn’t a new policy; it was simply removing a headwind,” preventing the expiration of tax cuts enacted during Trump’s first term.

The president has enacted other tax benefits in addition to the tax cut extension, such as “no tax on tips or overtime” rules. But banking economists say its macroeconomic effects may be limited and that boosts from this spring’s tax refunds may fade later this year.

Federal Reserve officials have indicated that persistent inflation pressures from the tariffs are constraining their ability to reduce interest rates, as Trump has urged them to do. And this, in turn, is a large part of the reason why mortgage, bank and auto loan rates remain high.

The president, at the urging of his staff members and Republican lawmakers, has tried a “pivot to affordability,” Treyz said, a term Trump had called “a Democratic scam.”

But his proposals — imposing lower interest rates on credit cards, banning large corporations from buying single-family homes, or fee refunds — haven’t gained much traction in Congress. And on health care, the president has enacted deep cuts to health coverage and food stamps that will likely worsen cost-of-living challenges for low-income households.

A coalition of conservative, liberal and libertarian economists has encouraged the White House to focus on other priorities: spurring housing construction, reducing budget deficits, doing more to lower drug prices and reducing more tariffs.

At the White House last week, as part of his pivot toward affordability, Trump rallied tech leaders for a “taxpayer protection pledge,” to allay fears among voters that newly built data centers for artificial intelligence projects would drive up electricity prices.

Energy market analysts said they doubted the basic mechanisms of how such a promise would work. Trump administration officials acknowledge that the commitment is voluntary.

Data centers are a huge cost for technology companies. And a key part of the stock market’s neglect, Garvey said, is still related to investors who are selling technology stocks out of fear that all the heavy spending on AI will not pay off.

But corporate earnings for this quarter are expected to be strong, led by technology. And against the grain of the geopolitical moment, most traders and portfolio managers seem to believe that the market will overcome the war with Iran.

Top bank strategists continue to project higher market valuations this year. If they’re right, the previous disconnect between stocks in a bull market and a bleak middle and working class could quickly resurface.

“The markets are insensitive. They don’t necessarily think about humanity, they don’t think about the bottom half,” Garvey said. “What matters is the aggregate. Politically, you may not agree with that, but the markets don’t care.”

This article originally appeared in The New York Times.