US President Donald Trump gave Wall Street exactly what it hoped for on Tuesday evening when he announced a two-week ceasefire with Iran, triggering a relief rally in the stock market.
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This result is a reminder of how the TACO trade came to be one of the past year’s defining market trends. Stock surged on the news. with the Dow rising more than 1,300 points at the opening bell. Oil prices tumbled and bond yields dropped as markets recalibrated expectations for the economy.
Still, some finance pros and economists think a victory lap may be premature. Here’s what some of the most prominent voices in the economic and financial spaces are saying about the ceasefire and what it means for markets.
Mohamed El-Erian, former PIMCO co-CIO
The famed economist shared a detailed take on X, warning investors not to get too comfortable in the aftermath of the ceasefire. He highlighted the list of questions that Wall Street is likely assessing, including whether the ceasefire will hold and whether the Strait of Hormuz can be reopened with minimal complications.
“Beyond the region, economies will continue to navigate energy prices that remain higher than pre-war levels, an uncertain outlook, and the economic implications stemming from the last six weeks of war,” he said.
Marko Kolanovic, former chief stock strategist at JPMorgan
Kolanovic was much more skeptical of the ceasefire, writing on X that “things don’t add up.” The former quant chief at JPMorgan has been a vocal critic of the war, warning that investors shouldn’t count on a simple reversal of Trump’s position to erase the impacts of the war.
“Iran’s 10 points include removal of all sanctions, keeping all support for proxies, control of Hormuz and transit fee as a form of reparation. It will not happen. US and allies would never accept it. This is just buying time.”
David Morrison, Senior Market Analyst at TradeNation
Morrison highlighted the uncertainty surrounding US markets following Trump’s ceasefire decision, noting that its success is highly contingent on the Strait of Hormuz being reopened and Israel abiding by the agreement terms.
“There is speculation that Iran may demand payment for each ship or tanker wanting to make the journey,” he noted. “The big question then would be if President Trump viewed this as an acceptable deal under the ceasefire agreement. And all this takes place within a two-week window, with no clear idea of what a final and lasting peace agreement may look like.”
Jeffrey Roach, Chief Economist at LPL Financial
The economist noted that improvements in energy supplies will help reduce pricing pressure, likely to the delight of investors. However, he also said the broader market fallout from the Iran conflict won’t ease quickly.
“We cannot ignore the lingering second order effects on the global economy so investors should continue to watch how geopolitical risks may affect wholesale prices, growth, and financing conditions,” he said.
Roach added, though, that the inflation outlook has increased, though it will likely run slightly hotter in April as the global economy continues to adjust.
Justin Bergner, PM at Gabelli Funds
Bergner sees the positive short-term impact on markets as likely to continue, but he maintains that the lack of economic data makes it difficult to assess how the US will be impacted in the longer term.
“How the market reacts a few months out will depend on the economic fallout from the Iran conflict on consumer and business sentiment and spending decisions, including the degree to which oil prices and inflation expectations remain elevated,” Bergner said.
Robert Edwards, CIO at Edwards Asset Management
Edwards maintains that investors can expect a stock market rebound in the coming months, as Trump is likely to want to keep the market strong and gas prices low ahead of the midterm elections. In his view, stocks can continue rising despite the persisting uncertainty surrounding the ceasefire.
“Even with this optimism, oil prices and stocks are still inversely correlated for the time being,” he said. “The idea of a reopening of the Strait of Hormuz is exactly what is needed to push oil prices back into the double digits. It’s unclear how long these declines in oil will last, but it’s looking more likely that the spike in oil prices in recent weeks was indeed temporary.”
