Wall Street is closely monitoring an upcoming presidential address. On April 1, the White House announced that President Trump will deliver a national speech at 9 PM Eastern Time to provide a significant update on Iran. White House Press Secretary Levitt made the announcement on social media but did not disclose further details.
Market expectations suggest Trump will reiterate plans to conclude military operations within two to three weeks. Earlier, Trump indicated that the U.S. could end its military actions against Iran soon, emphasizing that the primary objective—preventing Iran from acquiring nuclear weapons—has been achieved. He added that a formal agreement with Iran may not be necessary to end the conflict.
These statements have fueled FOMO (Fear Of Missing Out) sentiment in the markets. U.S. stocks extended gains for a second consecutive day, with the Nasdaq posting its strongest two-day performance since May 2025. Gold prices rose for the fourth straight day, climbing over 6% this week, as traders bet on potential Federal Reserve rate cuts amid growing economic concerns. Meanwhile, oil prices retreated, falling near $100 per barrel.
However, questions remain about whether this rally is sustainable. As hopes for a ceasefire drive market optimism, a growing divergence between hard economic data and survey-based soft data is becoming increasingly pronounced. While macroeconomic indicators continue to weaken, sentiment-driven metrics have surged on ceasefire expectations. Many traders are questioning whether Trump’s statements signal genuine progress or merely another market manipulation tactic.
U.S. stocks advanced for a second day on April 1, with the Nasdaq Composite rising 1.2% and the S&P 500 gaining 0.7%. The Dow Jones Industrial Average extended its gains to three days, buoyed by gains in Boeing and Caterpillar. The memory chip sector led the rally, posting its second-best performance on record.
The Magnificent Seven stocks initially showed strong momentum but later lost steam. Analysts noted that the rally was driven not only by improving fundamentals but also by widespread FOMO sentiment. Piper Sandler derivatives trader Tom Keen observed that any hint of positive news prompts investors to quickly re-enter risk assets. Asym 500 founder Rocky Fishman described the trend as a "war-is-ending trade."
This behavior is reminiscent of last year’s market surge when Trump announced a temporary tariff pause, catching many hedge funds off guard. Prediction market data reflects growing optimism, with Polymarket indicating a 65% probability of a U.S.-Iran ceasefire by June 30, up from 52% in late March.
However, analysis suggests the rally may be technically driven rather than fundamentally supported. Data from Goldman Sachs’ prime brokerage unit showed that net buying activity, which was 1.7 standard deviations above the one-year average, was largely fueled by short covering. Short covering volumes were 4.7 times higher than long selling volumes. Additionally, institutional activity remained subdued, with overall trading activity rated a mere 5 out of 10. Both long-only and hedge funds maintained neutral positions, indicating cautious sentiment.
Goldman Sachs analyst Chris Hussey noted that the day’s gains were primarily driven by short squeezes rather than genuine long positioning. Early optimism surrounding Trump’s speech pushed indices toward key resistance levels, but subsequent headlines about Middle East tensions caused gains to fade. Throughout the day, major indices experienced multiple pump-and-dump cycles, failing to sustain upward momentum.
Derivatives market dynamics also amplified the rally. Option market makers’ hedging activities intensified as prices rose, forcing them to buy index futures to balance their positions. David Boole, Managing Director at BayCrest Options, noted that each point gain triggered additional buying pressure, suggesting momentum and technical factors were driving the market rather than long-term fundamentals.
According to Goldman Sachs, gamma exposure among market makers shifted from a net short of over $7 billion to nearly neutral after quarterly options expiration, which may reduce market volatility.
Gold extended its rally for a fourth consecutive day, rising over 6% this week—its strongest weekly gain in nearly 10 weeks. Spot gold climbed 0.6% to $4,788.13 per ounce during early trading on April 2, briefly touching $4,790.
Christopher Wong, a strategist at OCBC Bank, explained that gold’s rally reflects expectations of Fed rate cuts if geopolitical tensions ease and growth concerns resurface. Lower real yields would support gold prices. Indeed, recent price movements suggest markets are pricing in a dovish shift in Fed policy for 2026.
Notably, gold fell nearly 12% in March, its worst monthly performance since October 2008, as rising oil prices fueled inflation fears and reduced rate-cut expectations. However, the tide has turned as ceasefire hopes grow. A weaker U.S. dollar also provided additional support for gold. Bitcoin briefly touched $69,000 but gave up gains as U.S. stocks retreated, ending the day flat.
Oil prices exhibited heightened volatility, swinging wildly on conflicting headlines about ceasefire prospects. WTI crude fell 1.8% to $98.37 per barrel during early trading on April 2, after declining 1.2% the previous day. Brent crude futures dropped 2.7% to $101.16 on April 1. The energy sector within the S&P 500 fell 3.9%, its worst single-day performance in a year, with ExxonMobil declining 5.2%.
Throughout the day, oil prices fluctuated in response to Trump’s and Iran’s statements:
- At 8:45 AM, Trump claimed on Truth Social that Iran had requested a ceasefire, causing oil prices to fall. He later threatened to bomb Iran if it did not reopen the Strait of Hormuz, leading to a rebound. - At 10:30 AM, Iran’s foreign ministry denied the claims, calling them false and baseless, which pushed oil prices above $100. - At 1:00 PM, White House officials suggested Trump would reiterate a two-to-three-week timeline for ending the conflict, causing prices to dip again. - At 1:45 PM, Israeli media reported stalled U.S.-Iran negotiations, leading to another price surge and a decline in U.S. stocks.
This headline-driven volatility reflects a deep divide between macro and physical market participants. While macro traders are pricing in a ceasefire, physical traders believe current futures prices underestimate the scale of supply disruptions. Goldman Sachs noted that this divergence is a key topic in client discussions.
International Energy Agency Executive Director Fatih Birol warned that energy rationing may soon be necessary in some countries as supply shocks intensify. Fuel shortages have been reported from France to Australia.
Despite market optimism, risks remain. A well-known adage is circulating among Wall Street traders: "Fool me once, shame on you; fool me twice, you can’t get fooled again." Recent reports suggest Trump may withdraw troops without reopening the Strait of Hormuz—a scenario previously considered unlikely. The strait handled about 20% of global oil and LNG shipments before the conflict.
Iran’s parliament recently approved a toll collection plan for passing vessels, which may partially restore supplies but also highlights the risk of Iran maintaining control over the strait. U.K. Prime Minister Keir Starmer stated that officials from dozens of countries will meet this week to discuss restoring energy flow but acknowledged the challenges, noting that a ceasefire and strait reopening may not occur simultaneously.
Will Todman, a senior fellow at the Center for Strategic and International Studies, pointed out that Iran is unlikely to agree to a ceasefire if it paves the way for future conflict. The Iranian regime believes time is on its side—the longer the Strait of Hormuz remains closed, the greater the economic pain for the global economy.
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