Investors are misreading news about the Iran war, analysts say as markets whipsaw

• The S&P 500 gained 4.5% and Nasdaq surged 7.2% last week on ceasefire optimism, but markets reversed on Monday after the Strait of Hormuz reclosed following its brief Friday reopening
• The Strait of Hormuz carries 20% of the world's oil and gas supply, and its sustained reopening is critical for any lasting stock market recovery according to analysts
• Deutsche Bank warns of a 2022-style scenario when the S&P 500 rallied over 10% in early weeks of the Ukraine war on settlement hopes, only to ultimately fall 19% for the year

Market Summary: Iran Conflict Creates Whipsaw Conditions

Analysts warn investors are misinterpreting developments in the Iran conflict, leading to volatile market swings as optimism may be misplaced.

Key Market Movements:

• S&P 500 gained 4.5% last week; Nasdaq Composite surged 7.2%
• Nasdaq posted 13th consecutive winning session Friday, matching a streak unseen since 1992
• Global equities reversed Monday as optimism faded

Critical Developments:

The Strait of Hormuz—through which 20% of global oil and gas flows—briefly reopened Friday, sparking market rallies. Iran announced its closure again the following day, erasing gains. A two-week U.S.-Iran ceasefire agreed April 7 expires Tuesday, with uncertainty around extension.

Analyst Warnings:

BCA Research's Matt Gertken cautioned that unlike Trump's "liberation day" tariff tactics, the president lacks full control over Middle East events. Iran maintains a "higher pain threshold" after being attacked, limiting Trump's ability to de-escalate at will.

Deutsche Bank drew parallels to early 2022, when misplaced optimism about Russia-Ukraine peace negotiations preceded significant declines. The S&P 500 fell 25% from January peak to October trough that year, finishing down 19%—the worst performance since 2008.

Investment Outlook:

Orbis Investment Management's Patrick O'Donnell noted markets are taking a "glass half full" view, warning the conflict will have "quite a long-lasting effect" on the global economy. BCA advised investors to avoid complacency over a 12-month horizon, particularly as Trump faces election-year pressures and has yet to secure guarantees on Iran's nuclear capabilities—a key White House objective.

Sustained stock recovery depends on uninterrupted energy flows resuming through the strategic strait.