Markets Surge on Hope Trump May End Iran Conflict Soon

What happened

Major U.S. stock indexes surged on March 31 following a Wall Street Journal report that President Trump told aides he was willing to end the military campaign against Iran, even if the Strait of Hormuz remained largely closed. Defense Secretary Pete Hegseth indicated the next few days would be decisive, warning that hostilities would intensify without a deal. The S&P 500 jumped 2.91 percent to close at 6,528.52, the Nasdaq rallied 3.83 percent to 21,590.63, and the Dow rose 2.49 percent to 46,341.51. These were the largest one-day gains since May 2025, when markets responded to a truce in U.S.-China trade tensions.

Why the stock moved

Markets rallied on speculation that an earlier end to the Iran conflict could normalize energy flows through the Strait of Hormuz and ease the oil price spike that had been fueling inflation concerns. The month-long war had pushed the S&P 500 and Dow toward their deepest quarterly declines since 2022, as investors worried higher fuel costs would hurt consumer demand and force the Federal Reserve to raise interest rates. Technology stocks led the rebound, with Nvidia up 5.6 percent, Alphabet gaining 5.1 percent, and Meta jumping 6.7 percent, as investors saw reduced risk to economic growth and corporate earnings.

Bigger picture

The Iran conflict has dominated markets throughout the first quarter of 2026, leaving the S&P 500 down 4.6 percent year-to-date, the Nasdaq off 7.1 percent, and the Dow down 3.6 percent. Both the Dow and Nasdaq had recently entered correction territory, falling more than 10 percent from recent highs. The oil price surge stemming from the war revived inflation worries significantly enough that money market traders now expect the Fed is more likely to raise rates by year-end than cut them. Meanwhile, technology stocks have faced additional pressure from concerns that massive AI spending by companies like Microsoft, Alphabet, and Amazon may take too long to generate returns. Tuesday's jobs data showed openings fell more than expected in February, with hiring at the lowest level in nearly six years.

What investors watch

Investors will closely monitor developments in negotiations with Iran over the coming days, which Defense Secretary Hegseth described as decisive. Any concrete signs of a ceasefire or deal could further boost sentiment, while escalation would likely reverse recent gains. Market participants will also watch oil prices and whether they retreat from elevated levels if energy flows through the Strait of Hormuz begin normalizing. Federal Reserve commentary on inflation expectations will be critical, given that traders have shifted from anticipating rate cuts to pricing in potential rate increases. Finally, upcoming earnings reports from major technology companies will be scrutinized for evidence that heavy AI investments are starting to pay off.

This article was generated by Quantli AI using publicly available news sources.