Reports predicting an imminent US ground invasion of Iran intensified over the weekend, triggering an apocalyptic response from the Iranians. The Houthis in Yemen joined the ever-expanding conflict, likely at the behest of Iran, complicating the increasingly chaotic picture further.

Trump ramped up his attempts to gaslight markets with a flurry of detail-free promises of an imminent deal one minute then wild threats of hellfire the next but, given a complete lack of anything credible to digest, Wall Street just isn’t listening any more.

For most of Monday US stocks did a whole lot of nothing with traders unsure as to what posture to take in a vacuum and no trustworthy information coming from any of the conflict participants. But the indexes swooned late in the session to finish in the red again with the S&P 500 creeping closer and closer to official correction territory.

A very rough month and quarter (see my Q1 Market Review here) came to an end at long last on Tuesday with the oil price at a four-year high following its biggest monthly jump in history and US gas prices at the pump averaging above $4/gallon for the first time since mid-2022 and rising, with some places in California seeing closer to $7.

However, the indexes roared higher for their best one-day session in close to a year which was put down to dip buyers and bargain hunters finally showing up on the back of Iran signaling possible co-operation in ceasefire talks and end-of-quarter window dressing which can often create some distortions on the final day.

Trump’s incoherent, jumbled flip-flopping continued after the close. He pledged to bomb Iran “back into the Stone Ages”, end the war in two weeks’ time and touted peace negotiations, all in literally the same sentence. He then promised to grace us all with even more of this kind of insight in a primetime address to the nation the following day.

Q2 kicked off on Wednesday and stocks followed through strongly on Tuesday’s monster rally following spectacular gains in Asia and Europe with a perception that it may be dawning on Trump that the current status of the war is untenable with his approval ratings in the toilet and the midterms coming up in a few months.

The president’s “very important” twenty-minute address was anything but. It was no more than a rambling, self-serving verbal summary of his recent social media posts and gave traders nothing new to work with.

Hard to believe, but Thursday was the one year anniversary of so-called “Liberation Day” and the subsequent market disruption caused by the tariff strategy, but attention is very much focused elsewhere at the moment. Asian and European markets fell back after the letdown of Trump’s disappointing update and Iran’s “bring it on, motherf*****” -style response offered no peace.

Wall Street initially followed the lead of overseas markets with the indexes giving back some of Wednesday’s gains as energy prices rocketed higher again on the prospect of at least two or three more weeks of escalating bombardment in the region and Trump’s bizarre reference to some kind of magical “natural” self-opening of the Strait of Hormuz. A late mini-surge dragged stock prices back to basically flat for the session and pushed interest rates lower ahead of the long weekend.

A Jobs Report released on a Friday when the stock market was closed meant that we aren’t going to get to see any equity market reaction until Monday and that reaction could easily be swamped by geopolitical developments over the weekend.

It was a very solid report with new job creation above even the highest estimates and a fall in the unemployment rate to 4.3%, although downward revisions to prior data took off some of the shine.

Some other things I’m thinking about ..

* Going into a trading blackout with a high level of unknowable risk is an unsettling thought for Wall Street traders. This is leading to a relatively predictable pattern of end-of-week selling as relative optimism is typically replaced by risk aversion as the week goes on. Since the Iran war began, the S&P 500 has actually posted cumulative gains over the first three days of the week but has fallen 9% on Thursdays/Fridays. The rationale is simple; a lot can happen in the war during a two-day untradeable period, especially given Trump’s habit of deliberately announcing disruptive policies when US financial markets are closed.

* After Trump’s nothing-burger address on Thursday provided no clues, traders have begun to scan the calendar for indications of when this war might end. The only event that really jumps out is the mid-May meeting between Trump and Chinese premier Xi. That’s still a long way off.

* Nevertheless, after the best weekly gain of the year for stock markets, the bulls may be starting to chomp at the bit and the bears suddenly look a bit twitchy as Trump looks for an off-ramp to the unpopular war which has clearly not gone as breezily as he assumed it would. The sense is growing that this stock market may soon begin to look for excuses to head north instead of for reasons to sell.

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ARTICLE OF THE WEEK ..

It’s a disgrace that this is being permitted. If this crap shows up in your 401k or 403b anytime soon, do NOT go anywhere near it!

.. AND I QUOTE ..

”You need nearly twice as much income today to afford the typical US home compared to before COVID.”

Nick Maggiulli, Ritholtz Wealth Management

LAST WEEK BY THE NUMBERS:

Last week’s S&P 500 market color courtesy of finviz.com

Last week’s best performing US sector: Real Estate (two biggest holdings: Welltower, Prologis) ⬆︎ 3.3% for the week

Last week’s worst performing US sector: Energy (two biggest holdings: Exxon-Mobil, Chevron) ⬇︎ 3.7% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 1.7% last week, is down 3.8% so far this year and ended the week 6.0% below its all-time record closing high (01/27/2026).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 1.6% last week, is up 2.1% so far this year and ended the week 7.5% below its all-time record closing high (01/22/2026).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price rose 3.0% last week, is up 2.7% so far this year and ended the week 8.1% below its all-time record closing high (02/25/2026).

INTEREST RATES:

* FED FUNDS RATE * ⬌ 3.625% (unchanged from a week ago)

* PRIME RATE ** ⬌ 6.75% (unchanged from a week ago)

* 3 MONTH TREASURY ⬇︎ 3.70% (3.73% a week ago)

* 2 YEAR TREASURY ⬇︎ 3.79% (3.88% a week ago)

* 5 YEAR TREASURY ⬇︎ 3.94% (4.06% a week ago)

* 10 YEAR TREASURY *** ⬇︎ 4.31% (4.44% a week ago)

* 20 YEAR TREASURY ⬇︎ 4.88% (4.99% a week ago)

* 30 YEAR TREASURY ⬇︎ 4.88% (4.98% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday

* Decided upon by the Federal Reserve Open Market Committee at periodic meetings 8x a year. Used as a basis for overnight interbank loans and for determining high yield savings interest rates.

** Wall Street Journal Prime Rate as of Friday’s close. Tending to move in lockstep with the Fed Funds Rate, this measure is used...