US-Iran tensions have been capping US stocks all along: Trump’s comment triggered a rally
2026-01-15 11:34:00
I’ve been wondering these days why US stocks didn’t rally on the softer than expected US core inflation and yesterday I think I got the answer. The upside has been capped by US-Iran tensions.
In fact, after the initial pop following the CPI release, US stocks started to slowly edging lower and eventually the bearish momentum increased after Trump posted on his Truth Social that all the meetings with Iranian officials have been cancelled and that help for the protestors was on the way.
The fears of an imminent military action increased and the risk sentiment deteriorated. On the macro side, a war with Iran would trigger a massive rally in oil prices which would eventually weigh on economic activity and inflation. That’s why it was a risk for stocks.
Late yesterday, Trump said that the killing in Iran was stopping and that there were no plans for executions. For some context, Trump has been threatening “strong actions” in case the Iranian regime killed protestors.
Nasdaq futures surge after Trump’s comment
Yesterday’s comment eased the fears of an imminent military action and triggered a rally in US stock markets. The concerns eased further this morning as the Iranian airspace slowly returned to regular traffic following a previous block due to potential US strikes.
Looking ahead, the outlook for US equities remains bullish amid strengthening economy, easing inflation and Fed’s dovish reaction function. Without the risk of a military action in Iran, we will likely see new all-time highs soon.
