Stocks rallied and oil prices slumped after President Donald Trump announced a temporary pause in planned strikes on Iranian energy infrastructure.
The S&P 500 rose 2.25% while crude oil fell 11% following the president's comments. In a post on Truth Social, Trump said he had directed the Department of War to postpone any and all military strikes against Iranian power plants and energy infrastructure for a five-day period.
Trump said the decision followed what he described as "very good and productive conversations" between the United States and Iran over the previous two days. He characterized the talks as "in depth, detailed, and constructive" and said they would continue through the week. The five-day postponement, he added, is "subject to the success of the ongoing meetings and discussions."
Later, officials in Iran denied that direct talks with Trump had taken place.
The president's announcement came after a series of public threats and counter-threats. On Saturday, Trump warned he would target Iran's power plants if Tehran did not fully reopen the Strait of Hormuz within 48 hours. That warning followed comments a day earlier in which he discussed winding down the war, now in its fourth week.
Iran's Revolutionary Guards responded to the prospect of attacks on the country's electricity sector by saying they would target Israel's power plants and facilities that supply U.S. bases in the Middle East in retaliation against any assault on Iran's electricity infrastructure.
Market and policy takeaway
- The immediate market response included a meaningful equity rally and a sharp decline in oil prices, reflecting a repricing of near-term geopolitical risk.
- The president framed the pause as contingent on the outcome of ongoing discussions between the two countries.
- Contradictory public statements - including Iran's denial of direct talks - leave the durability of the pause uncertain.
The situation remains fluid: a temporary hold on strikes was announced and markets reacted accordingly, but conflicting statements and explicit threats of retaliation from Iran's Revolutionary Guards underscore continuing volatility in the region and in related markets.