I. The War and the President's Speech
Yesterday, we concluded that the S&P 500's pullback bottomed on Monday, just shy of a 10% correction. The S&P 500 fell on Monday to 6343.72, down 9.1% from its January 27 record high. That low could be retested, but we think that yesterday's big rally, combined with the recent drop in bullish sentiment, marked the bottom on Monday. Stocks rebounded yesterday and today on news that the US will end the war soon.
In his speech tonight, President Donald Trump confirmed that the United States could conclude its involvement in the Iran war within the next two to three weeks. He said negotiations are still underway, but threatened once again to obliterate Iran's electric power grid if there is no deal. He also said that if US satellites detect that Iran is rebuilding its nuclear program, American missiles will once again wipe out its efforts. He also stated the US will leave it to other countries to reopen the Strait of Hormuz.
In response to Trump's speech, Brent crude oil rose about $4 a barrel to $105. US stock futures fell 0.8%.
The White House announced on March 25 that Trump's trip to China was rescheduled to May 14. That was a tip-off that the administration was planning to end the war soon.
II. The US Economy and the War
