S&P 500 Posts Best Session Since May After Iran Signals Willingness to End War

The Catalyst

Iranian President Masoud Pezeshkian told EU officials that Iran has "the necessary will to end this war" if security guarantees are met — the first public signal from Tehran's leadership that a negotiated exit is on the table. Separately, the Wall Street Journal reported Monday night that Trump told aides he was willing to end the military campaign against Iran even if the Strait of Hormuz remained largely closed, followed by a Tuesday morning post: "Iran has been, essentially, decimated. The hard part is done."

Markets reacted immediately. The S&P 500 gained 2.91% to close at 6,528.52, with 441 of 500 index members finishing green — the broadest advance in weeks. The Nasdaq jumped 3.83% and the Dow added 1,125 points. Consumer discretionary, communication services, and tech led sectors, with Nvidia up 5%, Meta up 6%, and Marvell Technology up nearly 13% on a separate $2 billion Nvidia investment.

The Quarter That Was

The one-day bounce was dramatic but doesn't undo the damage. The S&P 500 closed Q1 down over 5%, its worst quarter since mid-2022. March alone saw a 5.1% decline as the Iran war disrupted global energy supply in what the IEA called the largest supply disruption in the history of the global oil market.

Brent crude gained over 60% in March — the biggest monthly jump on record going back to 1988 — and still sits above $100 despite intraday softness on the peace signal. US gasoline crossed $4 per gallon nationally for the first time since 2022. The Magnificent Seven fell 13% year-to-date. Tuesday's roughly $1.7 trillion in recovered market value represents about 30% of the total war-related drawdown, which puts the scale of remaining losses in perspective.

What the Perp Is Pricing

USA500 on Hyperliquid printed a 3.28% move versus the actual S&P 500's 2.91% — a modest premium suggesting the perp is tracking spot relatively tightly on this leg. That's a sharp contrast to earlier this month, when USA500 dislocated to $5,865 — down 13.5% — while the underlying index dropped about 1% during the initial Hormuz closure panic. Thinner books amplify moves in both directions, but the gap is narrowing as volume builds; 24-hour HIP-3 perp volume hit $113.5 million on the session.

The fundamental picture hasn't actually changed. The Strait of Hormuz remains effectively closed, oil is still above $100, and Pezeshkian's statement came with conditions that haven't been accepted. Chart analysts warn the sell-off isn't over despite Tuesday's move. If the peace signal fizzles or negotiations stall, the same energy-driven headwinds that took 5% off the index in March are still in play.

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