market reaction on Iran US: S&P 500 falls, $420 billion wiped out as Iran skips US talks, ceasefire fears rise

Following the new tensions between the USA and Iran, the S&P 500 index closed with a decline and the market value of approximately $ 420 billion was erased in one day. According to the Kobeissi Letter published on X, the main trigger was Iran’s “final decision” to skip important talks with the US in Pakistan. Iran informed the USA through Pakistani mediators that it would not attend the meeting planned to be held on Wednesday.

Iran said a “10-point ceasefire plan” brokered by Pakistan had been proposed, but that it had serious problems. Iranian officials believe the implementation of the plan is weak, meaning the rules may not be followed properly. Iran also said the plan suffered from ongoing naval pressure and increased tensions. Iran believes the talks are “pointless” due to the US blockade of the Strait of Hormuz, a key oil route. According to AP News, due to Iran’s backtracking, US Vice President JD Vance canceled his trip to Pakistan for talks.

Markets fall as US-Iran tensions rise

Markets reacted quickly as investors worried that a peace agreement would not be reached between the United States and Iran before the ceasefire ends. The ceasefire between the United States and Iran expired on Wednesday, raising fears of new conflict. Major US stock indexes fell on Tuesday; As CNBC TV18 noted, the S&P 500 fell 0.6%, the Nasdaq fell 0.6%, and the Dow Jones lost 293 points.

Doubts about US-Iran deal grow

According to a report by The New York Times & Axios via CNBC TV18, investor uneasiness increased following reports that J.D. Vance had paused his trip due to a lack of commitment from Iran. US President Donald Trump showed some optimism, saying he still expects a “big deal” with Iran. At the same time, Trump warned that the US military was ready to bomb Iran if the deal was not signed before the deadline. He also increased the pressure by saying he did not want to extend the ceasefire. Trump had previously claimed on social media that Iran had violated the ceasefire multiple times.

Oil prices are on the rise again

Oil prices rose again after previously falling because hopes for a deal have now faded. US oil (WTI) showed the market’s reaction, rising by 2.81% to $92.13 per barrel. Brent oil increased by 3.14% and reached $98.48 per barrel, approaching the $100 mark again. As CNBC TV18 noted, market expert Brian Mulberry said it is very difficult to build trust between the US and Iran due to the long history and tensions. He also said Iran’s leadership is divided, making it difficult to properly pursue any peace agreement. However, he still believes that the problem around the Strait of Hormuz can be resolved by the end of the week.

Markets were strong before

Markets were already weak on Monday as traders worried the ceasefire would end soon. Nasdaq also ended its 13-day winning streak, the longest since 1992. Markets were actually strong before this tension; S&P 500 and Nasdaq reached record levels last week due to peace hopes. In fact, the S&P 500 recently surpassed 7,100 for the first time.

Despite the current decline, experts say the overall market outlook is still positive. Strong first-quarter earnings and revenue growth are supporting stocks in the bigger picture, according to CNBC TV18’s Brian Mulberry. Some stocks still performed well; UnitedHealth Group shares rose more than 8% following strong results. The company also raised its future earnings outlook, boosting investor confidence.

What investors need to do now

Market expert Sarat Sethi warned investors against trying to time the market based on Iranian news. As CNBC noted, if a deal does happen, markets may have already adjusted to it, so swing trading may not help, he said. He advised investors to stick to defensive stocks like healthcare and consumer staples, which are safer during global tensions.

FAQ

Q1. Why did the S&P 500 crash and lose $420 billion?
The market fell as Iran skipped US talks, raising fears the ceasefire could end without a peace deal.

Q2. How does US-Iran tension affect oil prices?
Oil prices are rising because traders fear supply problems if tensions between the United States and Iran escalate.