- Markets jumped after Trump signaled potential de-escalation, but all those gains lost momentum as Iran denied talks and signaled further military action.
- Disruptions in the Strait of Hormuz continue to threaten roughly 20% of global energy supply, keeping inflation concerns elevated.
- Sentiment for major ETFs — SPY, QQQ and DIA — remained firmly bearish on Stocktwits.
Wall Street staged a relief rally on Monday, driven by hopes of de-escalation in the Middle East after U.S. President Donald Trump postponed strikes on Iranian energy infrastructure following what he described as “productive” talks with Tehran.
Retail traders, however, remain unconvinced for now, especially after Iran rejected any suggestion of contact with Washington, dismissing Trump’s remarks as an attempt to influence financial markets.
Retail Traders Choose To Stay Wary
Mixed signals notwithstanding, all three major U.S. indexes posted their best session since early February on Monday, though retail traders remain unconvinced that it signals anything durable. Stocktwits sentiment for the ETFs tracking the S&P 500 (SPY), Nasdaq (QQQ), and Dow Jones (DIA) all finished in the bearish zone.
"They want, very much, to make a deal. We'd like to make a deal, too. We're going to get together today," Trump told the press on Monday. "If it goes well, we're going to end up with settling this. Otherwise, we'll just keep bombing our little hearts out."
Regarding the Strait of Hormuz, Trump said it would be opened "very soon" and will be "jointly controlled" by "maybe me. Me and the next ayatollah, whoever that is."
A Stocktwits poll on whether the U.S. and Iran would reach an agreement by March 31 was telling: 55% of nearly 12,800 respondents voted 'No,' while 36% said 'Yes' and the rest chose to wait and watch.
The skepticism in the comments was sharp. "Trump is capable of saying we've made a fabulous deal and the rest of the world will be dead, literally. Nobody believes this guy, that's why he's becoming increasingly isolated, and the U.S. is too," posted one user.
Another was more scathing: "Imaginary negotiations. The liar making more stories up to not have to admit he really screwed up this time.”
Gulf Allies Entering Iran War?
The conflict may be widening. Saudi Arabia and other U.S. allies in the Persian Gulf are close to joining military action against Iran, The Wall Street Journal reported, citing people familiar with the discussions. Saudi Crown Prince Mohammed bin Salman is said to be keen to re-establish deterrence against Iranian interference in regional energy shipping and infrastructure and is nearing a decision on whether to participate in the strikes.
The United Arab Emirates, long a financial hub for Iranian businesses and individuals, has warned it could freeze billions of dollars in Iranian assets after coming under heavy attack in the early stages of the conflict.
However, a Bloomberg report early Tuesday said U.S. President Donald Trump stepped back from his threat to target Iran’s power infrastructure after allies and Gulf nations privately warned of the risks of escalation.
What This Means For Markets
SPY, QQQ, and DIA are all down more than 4% year to date, weighed down by geopolitical uncertainty and persistent concerns about AI stock valuations.
Some analysts view the selloff as a buying opportunity, even for precious metals, betting on an eventual resolution, but the path is a lot more complicated. Iran's grip on the Strait of Hormuz means a fifth of global oil supply remains effectively off the table, keeping crude prices elevated and inflation risk alive.
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