Trump Halts Attack on Iranian Energy as Nasdaq Enters Correction
U.S. Stocks Experience Sharp Decline Amid Geopolitical Tensions and Market Uncertainty
U.S. stocks faced a significant downturn on Thursday, wiping out earlier gains from the week. The Nasdaq Composite fell into correction territory for the first time in a year, marking a major shift in market sentiment. According to Dow Jones Market Data, the Nasdaq dropped 2.4% to 21,408.08, which means it has fallen more than 10% from its record high set on October 29. This meets the traditional definition of a market correction.
The S&P 500 also suffered a notable decline, dropping 1.7% to 6,477.16. This was the largest daily drop since the start of the Iran war and marked the index’s lowest level since September 3. It is now 7.2% below its record high. Meanwhile, the Dow Jones Industrial Average fell by 469.38 points, or 1%, to 45,960.11. The blue-chip index extended its month-to-date loss beyond 6%, putting it on track for its biggest monthly percentage-point drop since September 2022, when it fell 8.8%.
Political Developments and Market Reactions
Following the market’s sharp decline, President Donald Trump took to Truth Social to announce that he had paused plans to attack Iranian energy infrastructure until April 6. He claimed that talks with Iran were going “very well,” contrary to media reports. Michael O’Rourke, chief market strategist at Jones Trading, noted that he wasn’t surprised by Trump’s decision to delay the attack, as it could negatively impact Iran’s civilian population. O’Rourke pointed out that Trump has been seeking an off-ramp to the conflict all week, and further escalation would make such an outcome harder to achieve.
“Trump made it clear this week that he wants this conflict wrapped up because he is concerned about oil prices and the stock market,” O’Rourke said in an interview with Jendela Magazine. “To me, it’s not surprising that he posted this.”
However, late Thursday, the Wall Street Journal reported that the Pentagon is considering sending up to 10,000 more troops to the Middle East, giving Trump more military options. This development sparked fears of a potential ground war, causing stock futures to trend lower and oil prices to cut their decline after hours.
Ongoing Tensions with Iran
Despite Trump’s statements, the situation in Iran remains unresolved. Iranian officials have reportedly resisted overtures for negotiations, although Trump has insisted that talks are taking place. O’Rourke described the situation as “not over, it’s not resolved,” highlighting the difference between the current state of affairs and one year ago.
“Whether you call this a ‘TACO’ or not, it’s up to interpretation because it’s not over, it’s not resolved,” O’Rourke said. “TACO,” an acronym that stands for “Trump always chickens out,” is a term used by investors to signify Trump backing down under pressure from financial markets.
Additional Factors Impacting Markets
Several factors contributed to the market’s downward spiral on Thursday. A Reuters report indicated that Iranian hardliners were pushing for Tehran to obtain a nuclear bomb, which helped push stocks to their lowest levels of the session in the afternoon. Additionally, a weak Treasury auction for $44 billion in 7-year notes added to the market’s pain.
The yield on the 10-year Treasury note rose 8.8 basis points to 4.415%, the highest 3 p.m. Eastern time level since July, according to Dow Jones Market Data. Bond yields move inversely with bond prices.
Investors are closely watching rising oil prices and bond yields, while keeping an eye on any headlines that might signal a resolution with Iran. Brent crude, the global oil benchmark, continued to trade above $100 a barrel, reaching around $108 a barrel on Thursday when the U.S. stock market closed.
Rising Fears and Market Volatility
Gold and silver prices also declined on Thursday, adding to investor concerns. At the same time, the Cboe Volatility Index, also known as the VIX or Wall Street’s “fear gauge,” surged higher. The index finished above 28 on Thursday, its highest end-of-day level since March 6.
Meta Platforms was another notable loser on Thursday, falling nearly 8% and adding pressure to the Nasdaq. The company faced back-to-back courtroom losses in California and New Mexico, where it was found liable for failing to protect young people using its platform.
While the Dow and small-cap Russell 2000 were still clinging to weekly gains, both the S&P 500 and Nasdaq were on track for a fifth straight weekly loss. Phil Neuhart, head of market and economic research at First Citizens Bank, highlighted the period of high geopolitical uncertainty in a Thursday interview.
