The S&P 500 advanced for a second time this week as US efforts to end the war gathered pace, eclipsing news that Iran rejected a truce proposal and maintained its military strikes. Brent settled around $102 a barrel. Treasuries pared their March losses. Gold climbed.
President Donald Trump has been pushing for talks with Iran in a bid to halt a conflict that’s approaching the four-week mark. But the initiative has been clouded by uncertainties over the likelihood for a deal.
The White House said the US has been in productive talks with Iran in the last three days. Washington has compiled a plan stipulating the Islamic Republic dismantle its main nuclear facilities and use a reduced missile arsenal in self-defense only, according to people familiar with the matter.
But Tehran is signaling little willingness to compromise. A move by the US to start indirect talks is illogical and not viable at this stage, semi-official Fars news agency reported.
Iran has its own conditions for a ceasefire, state-owned Press TV added, citing an unnamed senior security official. The nation wants guarantees the US and Israel won’t resume their attacks as well as reparations for damages and recognition of its authority over the Strait of Hormuz.
“Markets are positioning for a conflict resolution, despite lingering strategic ambiguity,” said Elias Haddad at Brown Brothers Harriman & Co. “Ultimately, Iran’s response to the US de-escalation pivot will decide whether peak fear is behind us or still ahead.”
“There’s really no way to know at this point what the facts are regarding the state of negotiations, so expect more whipsaw action as things continue to progress,” said Bespoke Investment Group strategists. “While Iran still holds some cards, the chips are stacked heavily against them.”
Geopolitics is still in the driver’s seat, but the bigger story may be the stock market’s resilience, according to Mark Hackett at Nationwide.
“We haven’t seen a major drawdown, and that suggests retail investors are continuing to buy into weakness,” he said. “If tensions begin to ease, institutions may have to move quickly off the sidelines, and that could create a powerful rebound.”
It’s important for investors to not get overly bearish, especially during geopolitical events, which can change course at any time, according to Paul Stanley at Granite Bay Wealth Management.
“Markets may remain volatile for the next several weeks until earnings season begins in mid-April, as earnings season may help the markets refocus back to fundamentals, the economy and AI,” he said.
Optimism over earnings partly explains the S&P 500’s strength in the face of fighting in the Middle East.
Analysts estimate companies in the gauge will grow their profits by 11.9% in the three months through March, according to data compiled by Bloomberg Intelligence. That compares to a forecast of 10.9% before the war.
