By Martin Baccardax
Stock markets were back to trading headlines on Wednesday, with major indexes around the world booking solid gains on reports of potential detente between the U.S. and Iran. The moves were paired with a sharp pullback in oil prices and an easing in Treasury bond yields.
The New York Times first reported that Washington had sent a 15-point plan that could provide the basis for a one-month ceasefire in the four-week old war, adding to optimism born from President Donald Trump's suggestion of high-level peace talks with Tehran.
Details remain sketchy, and other reports suggest Iran is unwilling to negotiate without security guarantees. Attacks in the Middle East continued overnight, with Israel reportedly hitting a residential area near Tehran and Iran attempting drone strikes on Saudi Arabia and Kuwait.
The U.S. is also reportedly moving some 3,000 troops from the 82nd Airborne division to the region over the coming days.
"Overall, volatility remains elevated and a geopolitical risk premium persists," said ING commodities strategist Ewa Manthey. "Ongoing tensions continue to support higher prices, stoke inflation concerns, and reinforce expectations that policymakers may delay easing, or even tighten, monetary policy."
Nonetheless, the broader market tone remains positive heading into the Wednesday session, with Brent crude prices retreating firmly below the $100 mark, and last pegged at $95 a barrel, and stock futures powering higher.
Early trading suggests a 58 point gain for the S&P 500, with the Dow Jones Industrial Average priced for a 420 point advance and the tech-focused Nasdaq looking at a 260 point bump.
The Cboe Group's VIX volatility gauge, however, remains elevated and at 25 points, and suggests daily swings of more than 105 points for the S&P 500 over the next month.
The benchmark has also yet to reclaim its 200-day moving average of 6624 points, a level it breached for the first time in more than a year last Friday. Technical analysts say it needs to be reestablished within 10 trading days in order for markets to remain optimistic heading into the second quarter and beyond.
"Markets may remain volatile for the next several weeks until earnings season begins in mid-April, as earnings season may help the markets refocus back to fundamentals, the economy and artificial intelligence, instead of strictly following the Iran war and the price of oil," said Paul Stanley, CIO at Granite Bay Wealth Management in Portsmouth, NH.
In the meantime, however, bond markets may play a greater role in defining investor sentiment, given the sharp move higher in yields that has taken place since the war began on Feb. 28.
The selloff was extended on Tuesday, as well, following a poorly-received sale of $69 billion in 2-year notes, which saw a slump in foreign demand that forced Wall Street dealers to absorb nearly a quarter of the paper put up for auction.
Benchmark 2-year notes yields were marked 8 basis points lower from Tuesday's auction levels in early trading, and changing hands at 3.853%, while longer-dated 10-year notes were also moving lower in concert with the pullback in global crude prices.
Treasury market volatility, however, has surged more than 66% over the past month, with the Merrill Lynch Option Volatility Estimate, better-known as the MOVE index, marked at the highest levels since May of last year.
"Elevated yields put pressure on equity valuations, particularly in growth sectors such as technology," said Antonio di Giacomo, senior market analyst at multi-asset broker XS.com. "This factor acts as a counterbalance to geopolitical optimism, limiting the magnitude of upward moves."
"The S&P 500 is operating in an environment where optimism remains fragile and highly dependent on geopolitical factors," he added. "This translates into a market dynamic where any headline can trigger abrupt price movements."
Write to Martin Baccardax at martin.baccardax@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 25, 2026 06:35 ET (10:35 GMT)
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