See also: InstaForex trading indicators for DJIA (INDU)
US President Donald Trump remains the principal newsmaker whose statements are reshaping global politics and markets.
Yesterday evening (or at 01:00 GMT today), his address to the nation—which many expected to signal de-escalation — turned out to be a repetition of the aggressive rhetoric that has dominated the past four weeks. Trump confirmed he expects fighting to continue for another two to three weeks, threatened Iran with "extremely severe" attacks, and urged allies to "summon the courage" to secure the Strait of Hormuz, as we noted in our today's review "Dollar (USDX): hopes for peace collide with harsh reality."
As a result, Thursday became a day of sharp reversals across markets, including in the US equity market. Futures on the Dow Jones Industrial Average plunged about 1.2% (more than 500 points), while the S&P 500 and Nasdaq 100 fell about 1.3% and 1.6%, respectively, after Trump's address failed to deliver the de-escalation signals markets had hoped for.
On Wednesday, Wall Street had closed with a confident rebound: the Dow Jones rose 0.48% to 46,580.0 points, the S&P 500 added 0.72%, and the Nasdaq 100 climbed 1.16%. The market reacted positively to preliminary signs of a possible end to the military operation and to strong macro data: ADP showed private payrolls rose by 62,000 (forecast 40,000), and the ISM Manufacturing PMI rose to 52.7 — the highest since July 2022.
The technology sector led the recovery: Alphabet (Google) jumped 3.4%, and Nvidia and Meta both gained more than 1%. The rally was supported by a decline in oil prices, which briefly fell below $100 per barrel.
However, the optimism was short-lived. In his address, Trump said the US would launch extremely severe strikes against Iran over the next two to three weeks, promising to "set them back to the Stone Age." He also said that Iran had sought a ceasefire, but that any pause would depend on reopening the Strait of Hormuz.
Markets reacted instantly: futures tumbled, Asian markets opened sharply lower (Nikkei 225 fell 2.4%, Kospi dropped 3.4%), and oil surged again, returning above $106 per barrel for Brent and above $101 for WTI.
Key pressure factors: war and inflation
The conflict has entered its fifth week, and its impact on the energy market is becoming increasingly serious. Around 40 key energy facilities have been damaged in the Middle East, and the Strait of Hormuz remains effectively closed for a large portion of global shipping.
Some economists warn that if current tensions persist, oil could stay above $100 per barrel through the end of 2026, leading to slower growth and higher inflation.
Rising energy prices have rekindled inflation fears. According to the CME FedWatch tool, markets are now pricing in nearly a 50% probability of a Fed rate increase in 2026. Futures no longer price a full rate cut at any meeting through July next year, as we noted in our review "Oil (WTI): geopolitical premium melts on hopes for peace."
Market focus is shifting from hopes of recovery to a stagflation scenario — a combination of slowing growth and elevated inflation. This is especially dangerous for equities because corporate profits face a twofold squeeze: falling consumer demand and rising costs.
The dollar has strengthened again, moving above 100.00 on the USDX index, and 10-year Treasury yields rose 4 basis points to 4.37%. This adds further pressure on equities, particularly the technology sector, which is more rate-sensitive.
Friday, April 4, will bring the March US nonfarm payrolls report. The consensus expects 60,000 new jobs after a 92,000 decline in February. The unemployment rate is forecast to remain at 4.4%.
Important: US equity markets will be closed on Friday for Good Friday, so the initial market reaction to NFP will show up first in bond yields, the dollar, and commodity futures.
Any material upside surprise in unemployment or a weak NFP print could have an outsized impact when markets reopen on Monday.
Conclusion
The US equity market is once again at the epicenter of a geopolitical storm. Hopes for a quick end to the war, which produced a strong bounce on Tuesday and Wednesday, were shattered by Trump's aggressive rhetoric. Markets now accept that the conflict may last weeks and the energy shock may deepen.
The key zone 46700.0 (EMA200 on the daily chart)–46100.0 (EMA50 on the weekly chart) will likely be the battleground in the coming days. A break above 46700.0 and further gains would preserve the chance of a medium-term bull market recovery, while a break below 46,000.0 would open the way to 45,000.0–44,500.0.
Under any scenario, volatility will remain high. Investors should closely monitor diplomatic developments around the Strait of Hormuz and, most importantly, the employment data on Friday. Markets will likely remain hostage to the geopolitical situation until clarity emerges on the timing and terms of normalization around Iran. Success will favor those who can separate short-term rebounds from the longer-term downtrend, which will probably persist until oil prices stabilize and the Fed provides clearer signals on policy.
