Wall Street Rallies on Trump Delay in Iran Strikes

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Key Takeaways:

*Wall Street rallied sharply after Trump delayed strikes on Iranian energy infrastructure, easing immediate supply shock fears.

*Oil prices remain the primary driver of equities, overshadowing traditional macro indicators.

*Rising energy costs are feeding inflation expectations, delaying Fed rate cuts and keeping bond yields volatile.

Market Summary:

Wall Street is currently being driven by a highly unstable geopolitical macro backdrop, where sentiment is shifting almost entirely based on developments in the US–Iran conflict. The sharp rebound seen on Monday  with the Dow Jones Industrial Average rising over 600 points and both the S&P 500 and Nasdaq Composite gaining more than 1% was largely triggered by President Donald Trump announcing a delay in planned strikes on Iranian energy infrastructure following what he described as “productive” talks. This temporarily eased fears of a supply shock in the Strait of Hormuz, sending oil prices down nearly 10% and pulling Treasury yields lower, which provided immediate relief to equities. However, this optimism remains fragile, as Iranian officials have denied any negotiations, reinforcing uncertainty and limiting follow-through buying.

At a fundamental level, oil prices remain the dominant driver of equity direction, overshadowing traditional macro indicators. The recent surge in crude up more than 40% since the conflict began  has raised concerns about a renewed inflation wave, with institutions like Goldman Sachs now increasing recession probability to around 30%. Elevated energy costs are feeding directly into inflation expectations, forcing markets to reassess the Federal Reserve path. Rate cuts that were previously expected are now being delayed or even questioned entirely, while bond yields remain volatile. This dynamic is particularly negative for equities, as higher yields compress valuations and tighten financial conditions, especially for growth sectors.

From an index perspective, divergence within Wall Street is becoming clearer. The Nasdaq Composite remains the most vulnerable due to its sensitivity to interest rates and long-duration valuations, as seen by its recent inability to reclaim key technical levels like the 200-day moving average. Meanwhile, the Dow Jones Industrial Average has shown relative resilience, supported by cyclical sectors such as industrials and consumer goods, which benefited from the temporary drop in oil prices. The S&P 500 sits in between, reflecting both growth and value exposure, but all three major indices remain below key long-term trend levels, signaling that the broader market is still in a corrective phase rather than a confirmed recovery.

Looking ahead, the fundamental outlook for Wall Street remains highly dependent on three key variables: oil prices, bond yields, and geopolitical clarity. The recent drop in volatility with the VIX easing from recent highs suggests some stabilization, but futures markets are already pointing lower again, indicating that the rally may fade without concrete de-escalation. Analysts broadly agree that equities can stabilize only if oil prices sustainably decline and yields stop rising. Until then, the market is likely to remain headline-driven, volatile, and prone to sharp reversals, with short-term rallies being tactical rather than the start of a sustained bullish trend.

Technical Analysis

Nasdaq, H4: 

The Nasdaq has broken decisively below its ascending trendline support, signaling a clear shift from a previously constructive structure into a more fragile, bearish phase. This trendline, which had been intact since the late-October lows, acted as a dynamic support base, and its violation suggests that upside momentum has now materially weakened. The recent decline from the 26,090 high to the latest swing low near 23,800 represents a drop of approximately 8%–9%, highlighting a meaningful correction rather than a minor pullback. More importantly, price has now slipped below the 24,360 support level, a zone that previously acted as a key demand area. This breakdown confirms a bearish structure shift, with former support now likely to act as resistance on any rebound.

Momentum indicators reinforce the downside narrative. The Relative Strength Index is hovering in the low-40s, remaining below the neutral 50 level and signaling continued seller control without yet reaching oversold extremes. Meanwhile, the Moving Average Convergence Divergence is firmly in negative territory, with the MACD line below the signal line and the histogram expanding on the downside, reflecting sustained bearish momentum. Overall, the Nasdaq remains under pressure, with trendline breakdown and key support failure pointing to continued downside risk in the near term.

Resistance Levels: 24,360.00, 25,270.00
Support Levels: 23,560.00, 23,000.00