US stocks are under pressure after President Trump said the US would hit Iran “extremely hard” in the coming weeks, drawing warnings of broader retaliation.

 

Nikos Tzabouras, Senior Market Analyst at Jefferies-owned Tradu.com, on the S&P 500 and whether rising geopolitical tensions could knock the rally off course; he says the S&P 500 could fall further in the short term as investors turn more cautious, with rising oil prices making it harder for inflation to ease and raising doubts about how sustainable heavy AI spending is. However, he notes the broader picture is more balanced, with the US economy holding up relatively well and policymakers still able to offer support.

Nikos Tzabouras, Senior Market Analyst at Tradu.com, commented:

“The S&P 500 could resume its decline after President Trump’s address rattled sentiment, dousing hopes for a swift resolution to the Iran conflict. Worries over the economic fallout and higher-for-longer rates are revived as the spike in energy prices stokes inflationary risks, with markets pricing out any rate cuts this year. The conflict also threatens Wall Street’s key tailwind: the AI narrative. Massive investments are viewed with suspicion against an adverse backdrop, while energy-intensive chipmaking faces mounting hurdles.

 

“That said, Wall Street has shown a remarkable ability to look through disruption. The US economy is better equipped to handle the energy shock as a net oil exporter, and the AI proliferation story looks far from finished. The Fed has kept the door open to additional easing and the next Chair could be more inclined to cut rates. The S&P 500 has defied the doubters before and could do so again.”