Remember when the Iran war was supposed to tank everything? Well, plot twist: rumors of peace might actually be the market’s new favorite drug.
On Wednesday, reports that the US and Iran were nearing a peace deal sent traders into overdrive. President Trump even posted on Truth Social (because of course he did) that if Iran agrees to the terms, the “already legendary Epic Fury will be at an end.” Translation: the war might actually be ending. And the market absolutely loved it.
Here’s the thing—when geopolitical tensions ease, different parts of the market react in wildly different ways. It’s like watching a game of musical chairs where everyone suddenly knows where to sit.
**Oil Got Absolutely Clobbered**
First casualty: oil prices. Brent crude plunged nearly 9% to around $97 a barrel, while West Texas Intermediate dropped 7% to $94. Energy stocks followed suit, with the energy sector ETF sliding nearly 4%. Companies like Chevron and Exxon Mobil took it on the chin—down 3% each. This makes sense: less war means less supply concerns, which means oil doesn’t need to be expensive anymore. It’s basic economics, but it still stings if you own energy stocks.
**Tech and Airlines Had Their Moment**
While energy got punched, tech stocks threw a party. AMD jumped 14%, Super Micro climbed 12%, and Intel added 2%. The Nasdaq 100 was up more than 1%, with the broader market rallying hard. Why? Because lower oil prices mean lower inflation fears, which means the Federal Reserve might not need to keep rates sky-high forever. Tech loves cheap money.
Airlines also got a boost—the US Global Jets ETF jumped 4%. Remember, jet fuel prices have been brutal for carriers since the war started. Spirit Airlines literally collapsed over this. So when oil prices drop, airlines suddenly look less like they’re headed for bankruptcy.
**Bonds and Emerging Markets Join the Party**
Treasury yields tumbled across the board. The 10-year yield dropped five basis points to around 4.3%, while the 30-year fell to 4.94% (it had briefly crossed 5% earlier in the week). The market’s thinking: if inflation stays under control, the Fed won’t need to keep rates elevated. That’s good news for bonds and for anyone who’s been sweating about higher borrowing costs.
Emerging markets also rallied, with the iShares MSCI Emerging Markets ETF up 2%. These markets got hammered during the war because many Asian economies depend heavily on Middle Eastern oil. A peace deal means supply chains normalize and energy rationing ends.
**The Bottom Line**
This is what happens when geopolitical risk suddenly decreases: the market reprices everything at once. Energy gets cheaper, inflation fears ease, rates might stay lower, and suddenly the stuff that was getting crushed—airlines, emerging markets, bonds—suddenly looks attractive again.
Of course, this all assumes the peace deal actually happens. Trump’s Truth Social post included a pretty big “if”—and a threat to bomb harder if Iran doesn’t cooperate. So maybe don’t pop the champagne just yet. But for one day, at least, the market decided to bet on peace. And that was enough to send stocks soaring.
