U.S. stocks end mixed after late-day rebound as Trump's Iran deadline looms

By Joy Wiltermuth and Frances Yue

Stocks closed mixed Tuesday as President Trump intensified his threats against Iran to reopen the Strait of Hormuz by this evening

President Donald Trump ratcheted up the tone against Iran on Tuesday ahead of his evening deadline to reopen the Strait of Hormuz.

U.S. stocks ended mixed Tuesday, while still holding on to gains for April, as investors weighed President Donald Trump's intensified threats against Iran to reopen the Strait of Hormuz by this evening.

The major indexes trimmed losses in late-afternoon trading after Pakistan's prime minister urged a two-week extension to Trump's self-imposed 8 p.m. Eastern time deadline for Tehran to reopen the crucial Middle East chokepoint for shipping and tanker traffic. Pakistan Prime Minister Shehbaz Sharif also called on Iranian authorities to temporarily reopen the Strait of Hormuz to all traffic as a goodwill gesture.

White House press secretary Karoline Leavitt said Trump was aware of the proposal "and a response will come."

The Dow Jones Industrial Average DJIA ended Tuesday down 0.2%. The S&P 500 SPX closed 0.1% higher, while the Nasdaq Composite COMP ended up 0.1%, according to Dow Jones Market Data.

"Over the course of today's session, optimism and hope rose. We'll see if it's founded in a few hours," Jed Ellerbroek, portfolio manager at Argent Capital Management, said in a call.

"But even if that optimism is founded, we remain in this cycle of escalation, de-escalation, escalation," he added. "It's not the final all clear coming tonight."

Stocks have held up relatively well in the past week despite the conflict. In March, the Dow and the Nasdaq both fell into a correction - defined as a drop of at least 10% from a recent peak - while the S&P 500 narrowly avoided that large a drawdown following the U.S. and Israel's launch of attacks on Iran on Feb. 28.

While traffic through the Strait of Hormuz briefly appeared to pick up over the past few days, significant disruptions to the flow of oil and gas have been the norm since the war began, according to data from MarineTraffic.

U.S. benchmark West Texas Intermediate crude for May delivery (CL00) (CL.1) (CLK26) was up nearly 0.5% to settle at $112.95 a barrel on Tuesday - the highest level since June 16, 2022, according to FactSet data. Global benchmark Brent crude for June delivery (BRN00) (BRNM26) lost 0.5%, to $109.27 a barrel. Both benchmarks dipped lower in after-hours trade.

"The longer oil stays above $100 a barrel, the more damage it does to the U.S. economy and the global economy," said Anthony Saglimbene, chief market strategist at Ameriprise Financial.

The Cboe Volatility Index VIX, known as Wall Street's "fear gauge," pushed higher ahead of Trump's deadline, ending the day up 6.7% to 25.78.

Hedging activity tied to the S&P 500 has remained robust, according to Joe Mazzola, head trading and derivatives strategist at Charles Schwab. "You are still seeing people going into this event pretty well hedged and protecting against downside risks," he told MarketWatch.

This comes as the U.S. economy has been fairly strong and resilient, with corporate earnings still pegged to grow at a double-digit rate. "The market is trying to balance that really strong fundamental result with the big inflation and oil-price risk on the other hand," Argent's Ellerbroek said.

Against that backdrop, hopes for a de-escalation remained. "We have a playbook for this, where we set hard deadlines and potentially use them as leverage points around negotiations," said James McCann, senior economist for investment strategy at Edward Jones.

"We've seen that in geopolitical policy and on trade policy, as well, from this administration," McCann said. "It's hard to say exactly what's in the price, but markets are looking for that as a potential way to alleviate some pressure from the situation."

Robert Schroeder and Victor Reklaitis contributed.

-Joy Wiltermuth -Frances Yue

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04-07-26 1713ET