Why is S&P 500 and US Stocks Reacting Positively to Trump’s Hormuz Blockade?

The S&P 500 erased early losses and briefly turned positive on April 13 as the US military began enforcing a naval blockade of Iranian ports across the Strait of Hormuz.

The intraday reversal surprised traders. Equity futures had fallen sharply overnight after President Trump announced a blockade of the Hormuz blockade following the collapse of US-Iran peace talks in Islamabad. The talks reportedly failed over disagreements on uranium enrichment, proxy support, and sanctions relief.

Markets Absorb Blockade Shock

US Central Command confirmed the blockade became active at 10 a.m. ET on Monday. It targets vessels of all nations entering or departing Iranian ports but does not impede transit to non-Iranian destinations.

Iran had been exporting over two million barrels of oil per day before the operation. Crude surged above $104 per barrel on supply fears. US gas prices are now forecast to rise above $4.25 per gallon.

“Enjoy the current pump figures. With the so-called ‘blockade’, Soon you’ll be nostalgic for $4–$5 gas,” wrote Ghalibaf, Speaker of the Islamic Republic of Iran’s Parliament.

The S&P 500 had posted its best week since November, gaining 3.6%, on hopes of a swift resolution to the conflict.

That optimism unwound Sunday night before the surprising intraday reversal on Monday.

“The S&P 500 erases all losses and turns green on the day as the US begins its blockade of the Strait of Hormuz,” wrote analysts at the Kobeissi Letter.

S&P500 (SPX) Futures Performance. Source: TradingView

Despite the escalation, JPMorgan Chase strategist Mislav Matejka urged investors to buy the pullback.

“JPMorgan Chase says investors should buy market pullbacks, arguing conditions support another V-shaped recovery despite geopolitical risks. Strategist Mislav Matejka notes volatility may persist, but a 3–12 month horizon favors adding risk as bearish sentiment and oversold signals create opportunity,” wrote Deaton, citing Matejka.

The bank also expects international stocks, emerging markets, small caps, and value to outperform, with inflows likely to resume.

The bank expects a V-shaped recovery within three to 12 months, arguing that bearish sentiment and oversold conditions create opportunity.

Iran Enrichment Rollback Report Fuels Optimism

Reports emerged that Iranian officials are studying whether to abandon uranium enrichment as a US condition for ending hostilities. The report remains unconfirmed by Tehran but helped fuel the intraday equity recovery.

Shipping data from Kpler shows Strait of Hormuz traffic far below normal levels despite a slight weekend uptick. Failed negotiations and enforcement uncertainty continue to suppress flows through the critical chokepoint, which handles roughly 20% of global oil supply.

Bitcoin (BTC) held above $71,000, trading near $71,611 with a 0.74% daily gain. The resilience mirrors a broader pattern where risk assets have repeatedly absorbed geopolitical shocks during the conflict before rebounding.

Whether this calm holds depends on the first interdiction events and any diplomatic breakthroughs in the days ahead.

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