Opinion: End of Iran War Unlikely to Boost Stocks Despite 'Trump Bump' Expectations

Investors betting on a quick market rebound after conflict resolution may be disappointed, as inflation concerns could force the Fed's hand.

Apr. 5, 2026 at 8:06am

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While the eventual end of the conflict with Iran may provide some near-term relief, the broader economic implications, particularly around inflation, are likely to outweigh any potential 'Trump bump' for the stock market. The author argues that the Federal Reserve will be forced to shift its monetary policy stance, potentially raising interest rates, which would undermine the market's recent run-up.

Why it matters

The Iran war has led to a major energy supply disruption, causing a spike in oil and gas prices that is expected to significantly impact inflation in the coming months. This could force the Federal Reserve to change course on its dovish monetary policy, potentially raising interest rates and dampening the market's prospects despite hopes for a post-war rebound.

The details

The author notes that during Donald Trump's presidency, the major stock indexes saw substantial gains, but his tenure was also marked by periods of historic volatility. The latest bout of volatility has been driven by the Iran war, which has led to the closure of the Strait of Hormuz, a critical global oil chokepoint. This supply disruption has caused oil and gas prices to surge, with the average price of regular gasoline jumping by more than $1 per gallon over the past month. While investors are betting that a quick end to the conflict and the reopening of the Strait of Hormuz would lead to a 'Trump bump' for equities, the author argues that this view ignores the broader inflationary pressures the economy is facing. The author points out that the Federal Reserve is more likely to raise interest rates than cut them in the coming months, as it grapples with elevated inflation, effectively undermining the market's recent run-up.

  • The U.S. and Israel began military operations against Iran on February 28, 2026.
  • As of late evening on March 30, 2026, the conflict is still ongoing.

The players

Donald Trump

The 45th President of the United States, whose tenure oversaw some of the highest annualized stock market returns of any president since the late 1890s, but also periods of historic volatility.

Jerome Powell

The current Chair of the Federal Reserve, who has repeatedly pointed to sticky goods sector inflation caused by President Trump's tariffs as a reason the U.S. inflation rate is above the central bank's long-term target of 2%.

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What they’re saying

“While an eventual end to conflict in the Middle East will stem near-term uncertainty, it ignores the bigger picture.”

— Sean Williams, Author

What’s next

The Federal Open Market Committee (FOMC) will likely need to reevaluate its monetary policy stance in the coming months as it grapples with elevated inflation, potentially shifting from a dovish to a hawkish stance and raising interest rates.

The takeaway

Investors hoping for a 'Trump bump' in the stock market after the end of the Iran war may be disappointed, as the broader inflationary pressures facing the economy are likely to force the Federal Reserve's hand, potentially leading to higher interest rates that could undermine the market's recent run-up.