Posted 11 minutes after market close! U.S. stocks experience the worst day since the Iran war, and Trump "immediately" extends the 10-day "negotiation period."

U.S. stocks faced their sharpest sell-off in months amid concerns over escalating Middle East conflicts. Just 11 minutes after the market closed on Thursday, President Trump announced an extension of the deadline to strike Iran’s energy facilities by 10 days, aiming to leave more room for peace negotiations.

According to Xinhua News Agency and CCTV News, Trump posted on social media Thursday, stating that at Iran’s request, airstrikes on Iran’s energy facilities have been postponed for another ten days, until 8 p.m. Eastern Time on April 6.

CCTV reported that Trump emphasized, despite false news media and other sources spreading incorrect opposite claims, bilateral negotiations are ongoing and “progressing very smoothly.”

Financial markets quickly responded to this latest statement. The dollar index surged after hours, briefly surpassing 100.00 for the first time in three days. Meanwhile, the initially strong intra-day rally in U.S. crude oil prices sharply reversed, with increased volatility.

Prior to this, traders had grown impatient with Trump’s conflicting signals regarding Iran, coupled with soaring oil prices fueling inflation fears. Wall Street experienced its most turbulent trading day since the Middle East crisis erupted, with both stocks and bonds under pressure.

Inflation concerns hit stocks and bonds hard

Before Trump’s after-hours post, all three major U.S. stock indexes closed sharply lower on Thursday. The benchmark S&P 500 fell 1.7%, its largest single-day drop since January 20, reaching a six-month low. The tech-heavy Nasdaq declined 2.4%, dropping more than 10% from its late October high, entering a “technical correction” zone.

The bond market also suffered heavy losses. Late Thursday in New York, the 10-year U.S. Treasury yield rose 7.95 basis points to 4.4117%. The more rate-sensitive 2-year Treasury yield jumped 10.05 basis points to 3.9858%, climbing over 0.6 percentage points in the past month—the worst performance since September 2022. Demand for three consecutive U.S. government bond auctions totaling $183 billion this week was weak, with yields above market expectations, reflecting investor fatigue.

Amid disruptions to oil supply caused by Middle East tensions, Brent crude rose 5.7% to $108.01 per barrel on Thursday, the largest single-day increase since March 11; WTI crude climbed 4.6% to $94.48. The surge in oil prices prompted investors to reassess the Federal Reserve’s policy path, with markets abandoning expectations of rate cuts this year and even pricing in rate hikes. The OECD warned Thursday that the Middle East crisis could push U.S. inflation to 4.2% this year, the highest among G7 nations.

The “invisible ceiling” for oil and U.S. Treasuries

Amid oil price volatility, Wall Street is trying to find patterns amid the policy swings of the Trump administration.

Many analysts have observed that whenever energy prices or borrowing costs hit certain thresholds, the White House’s rhetoric tends to soften—what some call the “TACO moment” (Trump Always Chickens Out).

According to senior energy trader insights cited by Wall Street Journal, whenever U.S. crude approaches $95 to $100 per barrel, the White House’s tone of de-escalation becomes more pronounced, and expectations of government intervention rise. Jorge Montepeque, an analyst at Onyx Capital Group, noted that gasoline prices exceeding $4 per gallon are politically damaging, and Trump is clearly concerned about high oil prices.

U.S. Treasury yields are another trigger for cooling measures. Monica Defend, head of research at Amundi, said Trump became extremely sensitive to Treasury yields during his second term, “Whenever the 10-year yield approaches 4.5%, the government gets genuinely nervous, and that’s usually when they act.” To monitor this, Deutsche Bank strategist Maximilian Uleer developed a “pressure index” combining inflation expectations and Treasury yields to anticipate when the White House might adjust its strategy.

Extreme uncertainty in the evolving conflict and negotiations

This is the second time Trump has extended the deadline to strike Iran’s facilities since his initial threat on March 21. Earlier this week, he postponed the deadline to Friday, citing “productive” talks. On Thursday, he hinted at flexibility during a White House cabinet meeting, saying the deadline could be strictly enforced if special envoy Steve Witkoff and others report negotiations are not progressing.

The White House is oscillating between diplomatic efforts and military deterrence. On one hand, Trump directed officials like JD Vance, Marco Rubio, and Jared Kushner to facilitate a third-party mediation of a 15-point peace plan; on the other, the Pentagon has ordered the deployment of about 10,000 elite troops and five warships to the Middle East. Iran denies direct negotiations but confirms contacts with third countries.

Regarding the market’s volatile reaction, Steven Grey, CIO of Grey Value Management, said it’s not irrational.

“The market isn’t becoming hysterical; this is normal for an efficient market facing extreme uncertainty,” he explained. “The speed of shifting sentiment or outright waiting is entirely rational.”

Currently, many Wall Street firms are choosing to stay on the sidelines to avoid being caught off guard by the White House’s next social media post.

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