S&P 500 Gives Back Monday's Gains After Trump Vows to Hit Iran 'Extremely Hard'

The Address

Trump's Tuesday evening address was supposed to be the bookend. After both sides signaled willingness to negotiate on Monday — driving the S&P 500 up 2.4% in its best session in weeks — traders expected the president to outline an off-ramp. He did the opposite.

Trump told the nation the US would hit Iran "extremely hard" for another two to three weeks, vowing to send the country "back to the Stone Ages" before withdrawing. He reversed his Monday position on the Strait of Hormuz, now saying any ceasefire hinges on reopening the waterway — the same demand he'd dropped 48 hours earlier. Then he posted on Truth Social telling allied nations like the UK to "go get your own oil," dismissing countries that declined military involvement.

Foreign policy analyst Trita Parsi noted the shifting timelines — from "four days" initially to three weeks, now another 2-3 week estimate — suggesting "the United States is no longer in control of this war."

Oil Reloads

Brent crude jumped 7% to above $108 per barrel, with WTI surging to roughly $107. That completely reverses Monday's 3.4% oil decline that had accompanied the ceasefire optimism. Brent is now up approximately 40% since late February when the conflict began.

The Strait of Hormuz — which normally carries one-fifth of the world's oil and liquified natural gas — remains effectively shut. Traffic through the strait has ground to a halt since the US-Israel campaign started on February 28, and gasoline prices have topped $4 per gallon nationally for the first time in over three years. With Trump now conditioning a ceasefire on reopening the strait rather than accepting a deal without it, the energy squeeze has no clear end date.

The 48-Hour Whiplash

The speed of the reversal is the story. On Monday, Iran's President Pezeshkian told the EU he had "the necessary will to end this war." Trump told the New York Post the hard part was done. Markets priced in a ceasefire — the S&P 500 posted its best day in weeks, the Nasdaq gained 3.4%, and oil dropped. Forty-eight hours later, every one of those trades unwound.

S&P 500 futures fell 1.5%, Nasdaq 100 futures dropped 2%, and the VIX spiked 12.6% to 27.63. Gold rose as the safe-haven bid returned. Meanwhile, the ISM Manufacturing PMI came in at 52.7 with a prices sub-index of 78.3 — factories still growing, but input costs at their highest in months, confirming the oil shock is already feeding through to the real economy. The S&P 500 is now down roughly 4.6% for Q1 2026, with five of the last six weeks posting losses. Each ceasefire headline produces a sharp rally, and each escalation headline takes it back. Until the Hormuz situation actually resolves, that pattern holds.

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