Donald Trump predicts Iran war could drive stock market down 20% to 25%

President Donald Trump told CNBC on April 21 that he expected the Dow Jones Industrial Average and S&P 500 to fall roughly 20% because of the US conflict with Iran. In subsequent remarks, he ratcheted the forecast even higher, floating potential declines of 25% to 30%.

What Trump said, and what actually happened

The Iran conflict ignited on February 28, when joint US-Israeli airstrikes killed Iranian Supreme Leader Ayatollah Ali Khamenei. What followed was a cascade of retaliatory missile strikes from Tehran and a scramble across global markets to price in the possibility of a prolonged Middle Eastern war.

The S&P 500 did sell off, dropping about 8% from its pre-conflict levels and hitting a low of 6,343.72 in late March. By mid-2026, the index had clawed its way back to record highs. The Dow followed a similar trajectory, bouncing off its March lows and recovering to pre-war territory faster than most analysts anticipated.

Oil told a different story

Brent crude surged to $118.35 per barrel by March 31, driven largely by Iran’s moves to assert control over the Strait of Hormuz. That narrow waterway handles roughly 20% of the world’s oil shipments on any given day.

As tensions eased incrementally, oil prices pulled back from their highs. The pattern was familiar to anyone who watched oil markets during previous Gulf conflicts: spike, plateau, gradual normalization.

Why the market proved more resilient than expected

The conflict’s economic damage, while real, remained somewhat contained. The Strait of Hormuz disruptions were serious but temporary. Supply chains adapted. Alternative energy supplies filled gaps.

That said, Trump’s prediction wasn’t entirely wrong in spirit. The 8% drawdown in March was a down payment on that scenario. It just never fully materialized.

What investors should watch from here

Oil remains the key transmission mechanism. Any renewed disruption in the Strait of Hormuz would likely send Brent crude back toward or beyond the $118 level it hit in March.

Energy stocks and defense contractors have been obvious beneficiaries of the conflict. Airlines, shipping companies, and consumer discretionary names are all vulnerable to sustained oil price inflation.

Bitcoin and gold both saw increased interest during the March volatility window, consistent with previous geopolitical crises where investors sought assets perceived as uncorrelated to traditional equity risk.

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