Markets return to full trading on Monday for the first time since Thursday after observing the Good Friday holiday, with investors stepping back into a financial landscape shaped almost entirely by the ongoing US-Iran war and the diplomatic signals that have flickered into view over the past week.
The S&P 500 enters Monday near the upper limit of the declining trend channel that has dominated trading since the conflict began on February 28, with the benchmark index sitting around 6,582 after closing mixed on the final day of last week’s shortened session.
The most pressing factor heading into Monday is the expiry of President Trump’s latest deadline for Iran to reopen the Strait of Hormuz — Monday, April 6 being the date Trump specified in a Truth Social post last week when announcing a temporary pause on strikes against Iranian energy infrastructure. Whether that deadline holds, is extended again, or is acted upon will almost certainly determine how equities and oil prices move in early trading, making this one of the more consequential Monday opens in recent memory.
Oil remains the market’s single most important variable. West Texas Intermediate crude traded above $107 per barrel in the last session before the holiday, a level that represents a staggering increase from the sub-$70 range where prices sat before the war began. Every dollar on oil translates directly into inflationary pressure and a dampening of consumer spending — two dynamics that the Federal Reserve is watching with increasing alarm.
The Dow Jones Industrial Average closed Thursday’s session down 61 points, or 0.13%, at 46,504.67, after reversing early losses of more than 600 points through the session. The S&P 500 managed a slim 0.11% gain and the Nasdaq added 0.18%, a modest outcome that nonetheless extended what was technically Wall Street’s first winning week since the conflict began. That winning week was built primarily on Trump’s Tuesday comments suggesting the war could end within two to three weeks — comments that were disputed within hours, but which gave the market enough positive momentum to hold through Thursday.
The Federal Reserve’s reaction function is shifting in ways that concern both rate-sensitive sectors and growth investors. Before the war, the broad expectation was for multiple rate cuts through 2026. Now, with inflation projections being revised upward across most major banks, the likelihood of cuts has diminished significantly. The Federal Reserve Bank of Atlanta’s Market Probability Tracker suggests there is actually a 34% chance of a rate hike by June 17 — a number unthinkable just two months ago and a direct product of elevated energy prices feeding into the broader price level.
Defense stocks remain among the notable bright spots in an otherwise volatile market. Northrop Grumman, RTX Corporation and Lockheed Martin have all posted significant gains since the war began, benefiting from expectations of sustained government spending on military contracts. Investors seeking to hedge equity risk in the current environment have rotated into this sector with some purpose over recent weeks.
Tesla delivered 358,023 vehicles in Q1 2026, a figure representing around 6% year-on-year growth but a sharp sequential drop from the 418,227 delivered in Q4 2025. The market’s reaction was predictably brutal, with TSLA shares falling 5.4% on Thursday. The company’s energy storage segment delivered 8.8 GWh, but the narrative around delivery misses in a period where the Musk-Iran war relationship adds an additional political dimension to already complicated consumer sentiment made for difficult reading for shareholders.
March CPI data arrives on Friday and will be closely watched as the first inflation print to fully incorporate war-related energy price spikes. Economists expect a notable upward jump, which could rattle both bond and equity markets toward the end of the week regardless of what happens with the Iran diplomatic situation in the days prior.
