Three ways the stock market will flip if the U.S.-Iran war ends
Want to know how the market will react when the US-Iran war finally ends? CNBC’s Jim Cramer said Tuesday’s session was responsive to investors.
“Mad Money” host He “waved his hand” in trading on Tuesday as stocks finally recovered and rates fell, describing the day as “a test run for what will ultimately happen.” S&P 500 And Nasdaq Composite They rose 2.91% and 3.83%, respectively, following a series of headlines that gave investors hope that tensions in the Middle East would ease.
Wall Street Magazine Late Monday, President Trump reportedly told aides that the United States is willing to end military hostilities with Iran even if the Strait of Hormuz remains largely closed. He also said New York Post The Iran war will probably end soon. Both followed an unconfirmed report that Iran’s president reiterated his openness to ending the conflict with security guarantees.
“Today we saw what can happen when you give peace a chance,” Cramer said. “Maybe this dialogue with Iran is really nothing more than an exchange of messages. Maybe it’s meaningless. So think of today as a rehearsal for what will ultimately happen when the war is over.”
But Cramer predicted that the market would change in three ways when the war actually ended.
First, he noted that rates are poised to fall, indicating a major reversal. 10 year Treasury Since the war started a month ago. The yield on the 10-year Treasury bond, a benchmark that affects borrowing costs across the economy, jumped on concerns about inflation risks from higher energy costs and the low likelihood of the Federal Reserve cutting interest rates in 2026.
“Them [will] Cramer said of rates: “They’re coming down because we realize now that there’s a huge amount of inflation from the war. Not just from the rise of oil—we’ve seen that at the pump—but also from the byproducts coming in from the Gulf: fertilizer, polyethylene, aluminum.”
He continued: “We didn’t know going into the war that our farmers would need to raise prices because fertilizer prices would be much higher. If you let fertilizer fall again, you stop harmful food inflation.”
According to Cramer, who noted Tuesday’s gains, there will also be a big comeback in growth stocks. Nvidia And Marvel. Nvidia and Marvell were up 5.5% and nearly 13% respectively during the session.
As rates fall, Cramer said, investors can focus on what such fast-growing companies are actually doing right, without being distracted by conflicts in the Middle East. He noted a new strategic partnership between AI giants, including Nvidia’s $2 billion stake in Marvell.
“Money managers believe that price-to-earnings multiples (how much we would pay for a company’s earnings) have been terribly depressed by the war,” Cramer added. “If the war ends, we’ll start paying more for stocks of companies that haven’t missed a beat since the beginning.”
Finally, Cramer expects a rally in big bank stocks.
The war has raised concerns on Wall Street that deal-making will freeze. The financial group should also benefit from the end of the conflict and the possibility of further agreements. Case in point: Tuesday’s big winners were major investment banks such as: Goldman Sachs And Morgan Stanleyincreased by approximately 5% and 4%, respectively.
