Iran ceasefire deal nears, Wall Street says stocks are heading higher — buy the relief rally
The U.S. and Iran have tentatively agreed to extend their ceasefire by 60 days, raising hopes the three-month conflict is ending. One of Wall Street's top strategists says the 'pain trade' — the move that would hurt the most investors — is for stocks to keep climbing.
Idea
The Iran conflict has been hanging over markets for three months, keeping a risk premium baked into stock prices. A formal ceasefire extension would remove a major source of uncertainty, which historically unlocks cash sitting on the sidelines. Wall Street's biggest firms — including Citadel Securities — are already signaling that stocks are primed to move higher because too many investors are positioned defensively. When everyone expects bad news and the bad news doesn't come, stocks tend to surge as those defensive positions get unwound. Combined with a strong earnings season that has beaten expectations across tech and financials, this sets up a sweet spot for a broad market rally.