By The US stock market swung dramatically on Thursday, April 2, 2026, as geopolitical tensions tied to the ongoing US-Israeli war in Iran sent investors scrambling. Major indices opened sharply lower before staging a brief, volatile recovery — a pattern that has become increasingly familiar over the past five weeks of conflict.
The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite each dropped more than 1% at the opening bell, before briefly turning green on news that Iran may cooperate on reopening the critical Strait of Hormuz.
Trump’s Address Rattles Wall Street
President Donald Trump‘s Wednesday night national address set the tone for Thursday’s turbulent session. Trump did not provide a clear timeline for ending US military operations in Iran. He said the US would send Iran “back to the Stone Age” — language that markets interpreted as a signal of continued, open-ended conflict.
Trump also suggested that the US, viewing itself as independent of the Strait of Hormuz, would leave other nations to manage the critical shipping lane. That ambiguity alarmed global investors. A closed or disrupted Strait of Hormuz cuts off roughly 20% of the world’s daily oil supply.
Equity futures began falling immediately after Trump’s speech. By the opening bell on Thursday, the Dow had shed more than 600 points, the S&P 500 had dropped 1.3%, and the Nasdaq had lost 1.7%.
Donald Trump‘s remarks also suggested the US military would escalate operations before withdrawing within two to three weeks — a timetable investors found uncertain and unsatisfying.
Hormuz Headlines Spark a Sharp Reversal
Markets caught a sudden bid mid-morning when Bloomberg reported that Iran was working with Oman on a protocol to manage traffic through the Strait of Hormuz. The report implied that the critical waterway could remain open or at least partially operational.
All three major US stock market indices briefly turned positive on the news. The reversal was sharp but short-lived. The S&P 500, Dow, and Nasdaq each climbed off their lows before sliding back into negative territory.
The reaction underscores how sensitive markets have become to any signal — positive or negative — about the Strait of Hormuz. Analysts note that even partial reassurance about the waterway is enough to temporarily shift investor sentiment. Oil prices pulled back on the Hormuz news before stabilizing at elevated levels.
Oil Prices Surge Past $110 a Barrel
Oil markets have been among the most volatile assets since the war began in late February. Brent crude has risen roughly 50% since hostilities started, and Thursday was no exception.
Following Trump’s address, West Texas Intermediate (WTI) crude surged more than 10% to trade above $110 per barrel. Brent crude jumped approximately 6% to cross $107 per barrel. WTI’s discount to Brent briefly inverted — a rare market signal that has now occurred twice since the war began.
Energy stocks moved sharply higher in premarket trading. Devon Energy, Occidental Petroleum, Antero Resources, and Permian Resources each rose roughly 3% before the opening bell, benefiting from the continued elevation in crude prices.
Oil prices later pulled back after the Hormuz protocol report, demonstrating how quickly energy markets are responding to geopolitical developments in real time.
5 Ways the Iran War Is Impacting the US Stock Market
The conflict has reshaped market dynamics across multiple asset classes. Here are five concrete ways the US stock market is feeling the pressure:
1. Tech stocks are underperforming. Nvidia, Alphabet, Micron, Tesla, and Intel all fell between 2% and 3% in premarket trading Thursday. Risk-off sentiment is hitting growth and technology names hardest, with Nasdaq 100 futures sinking 1.4% before the open.
2. Energy stocks are outperforming. While the broader market sells off, oil-linked equities are benefiting. CF Industries Holdings, a fertilizer manufacturer exposed to Persian Gulf supply chains, gained 5% in premarket trading on concerns over continued disruption.
3. Crypto is following equities lower. Bitcoin dropped approximately 3% to trade near $66,000 on Thursday morning. Ethereum fell around 4% to approximately $2,000. Analysts at Orbit Markets noted that Bitcoin has shown reduced sensitivity to both positive and negative news in recent weeks, though it continues to broadly track equity direction.
4. Gold is whipsawing. Gold futures initially fell more than 3% as Trump’s speech sent mixed signals about the conflict’s timeline. Aluminum, which had reached a four-year closing high on Wednesday, also retreated. Copper declined alongside other industrial metals.
5. Donald Trump’s policy ambiguity is the key variable. Markets are not simply pricing in war — they are pricing in uncertainty. Each Trump statement carries the potential to move indices by more than 1% in minutes, making this one of the most policy-sensitive US stock market environments in years.
Jobless Claims Beat Expectations
There was one piece of positive economic data on Thursday. Initial jobless claims for the week ending March 28 came in at 202,000 — a drop of 9,000 from the prior week and well below the consensus estimate of 212,000.
The better-than-expected claims number provided a modest counterweight to the geopolitical gloom. However, continuing claims — which track Americans still collecting unemployment benefits — rose to 1.84 million for the week ending March 21, up slightly from a revised 1.82 million.
The March jobs report is due Friday, though markets will be closed for Good Friday. Investors will look to the report for any early signs of labor market softening tied to the war’s economic disruption. Bank of America has already revised its 2026 forecasts, projecting slower growth, higher inflation, and oil holding above $100 per barrel for the remainder of the year.
Thursday marked the final trading session of the holiday-shortened week. Volatility is expected to remain elevated heading into next week.
What Investors Are Watching Next
The US stock market’s near-term direction depends heavily on two factors: the status of the Strait of Hormuz and the pace of US military withdrawal from Iran. Any credible signal that the waterway will remain open could provide a sustained relief rally. Any escalation — or another ambiguous Trump address — risks pushing indices back toward recent lows.
Brent crude above $100 per barrel represents a meaningful drag on corporate earnings, consumer spending, and Federal Reserve flexibility. Until energy markets stabilize, the US stock market will remain hostage to the next headline out of Tehran, Muscat, or Washington.
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