U.S. Stock futures edged higher early Wednesday after President Donald Trump extended a ceasefire with Iran, citing the country’s fractured government as justification for delaying military action.
The move came shortly after Tuesday’s market close, with Trump stating on Truth Social that he had directed the military to maintain a blockade while awaiting a unified proposal from Iranian leaders. He emphasized that the ceasefire would continue until negotiations concluded, one way or another.
S&P 500 futures gained 0.5%, Nasdaq 100 futures added 0.7%, and Dow Jones futures rose by 214 points, or 0.4%. The uptick reflected investor relief that immediate escalation had been avoided, even as underlying tensions persisted.
Despite the pause in hostilities, the situation remains fragile. A lack of commitment from Tehran led to a delay in Vice President JD Vance’s trip to join peace talks, according to U.S. Officials cited by The New York Times, and Axios. Iranian state media later reported that negotiators from Tehran would not participate, calling the talks a “waste of time.”
Oil markets reacted sharply to the news, with Brent crude and West Texas Intermediate futures swinging between gains and losses as traders weighed the implications of a continued blockade on the Strait of Hormuz. By 4:52 a.m. ET, Brent traded at $99.81 per barrel and WTI at $90.86, levels elevated by the ongoing supply restriction.
The Strait of Hormuz remains closed, continuing to constrain global oil output and sustain inflationary pressures. Yet equity markets have shown resilience, with the MSCI World Index erasing a 3.29% post-conflict decline to trade nearly 2% above its level from March 2, the first session after hostilities began.
For more on this story, see U.S. Stocks Surge as Iran Reopens Strait of Hormuz After Lebanon Ceasefire.
Analysts noted that investors are increasingly treating the conflict as a managed risk rather than an imminent catastrophe. Ray Farris, chief economist for Eastspring Investments, said markets are pricing out extreme scenarios like oil reaching $200 a barrel, shifting focus back to corporate earnings and valuation fundamentals.
Grace Peters, co-head of global investment strategy at J.P. Morgan Private Bank, observed that the current environment allows investors to return to fundamentals, particularly as the S&P 500’s price-to-earnings ratio has fallen below its five-year average. She cited earnings season as a catalyst that could further support equity gains.
Stephanie Aliaga, global market strategist at JPMorgan Asset Management, cautioned that while the path remains de-escalatory, clarity is still lacking. She noted that markets had quickly priced in a “coast is clear” scenario, leaving room for volatility as details emerge.
The broader trend suggests markets are adapting to prolonged uncertainty by focusing on earnings and valuation rather than reacting sharply to each diplomatic shift. This pattern has repeated in past conflicts, where initial spikes in risk premiums fade as investors adjust to a new normal.
This follows our earlier report, U.S. Navy seizes Iranian cargo ship in Gulf of Oman, disabling engine with gunfire.
Still, the absence of Iranian engagement raises questions about the durability of the ceasefire. Without reciprocal commitment from Tehran, the extension relies entirely on U.S. Restraint, which could be tested if negotiations stall or collapse.
Why did stock futures rise despite the ongoing conflict with Iran?
Investors reacted positively to the extension of the ceasefire because it reduced the immediate risk of U.S. Military strikes, even though the underlying conflict remains unresolved and the Strait of Hormuz blockade continues to affect oil markets.
How are oil markets responding to the continued blockade of the Strait of Hormuz?
Oil prices remain elevated, with Brent crude near $99.81 and WTI near $90.86 per barrel, as the ongoing restriction on supply continues to exert upward pressure on global energy costs.
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