By Christine Idzelis
Trump says the U.S. will blockade the Strait of Hormuz
Stock-market futures on Sunday evening were pointing to a potential drop in major U.S. equities indexes on Monday as the Iran conflict remains unresolved despite a temporary cease-fire agreement.
Stock-market futures were down Sunday evening, suggesting investors were bracing for a sharp drop in major indexes after weekend talks between the U.S. and Iran failed to open the Strait of Hormuz and led President Donald Trump to announce a blockade of the crucial waterway.
Futures trading pointed to sharp drops for the Dow Jones Industrial Average and S&P 500, with the E-Mini Dow Continuous Contract (YM00) falling 1.1% and the E-Mini S&P 500 Future Continuous Contract (ES00) sliding 1.1%, according to FactSet data, at last check. The E-Mini Nasdaq 100 Index Continuous Contract (NQ00) was also down Sunday evening, dropping 1.3%.
“Iran peace talks did not yield success, with President Trump planning a blockade of the Strait of Hormuz,” said Stuart Kaiser, head of U.S. equity trading strategy at Citigroup, in a note emailed Sunday. “That nonviolent escalation leaves room for more talks, but will likely push oil prices higher in the interim.”
West Texas Intermediate crude prices (CL.1) were up 8% on Sunday evening at more than $104 a barrel, according to FactSet data, at last check.
Elsewhere in markets, bitcoin (BTCUSD) fell about 3% on Sunday, dropping below the $71,000 level.
Previously: Trump announces blockade of Strait of Hormuz as Vance leaves Pakistan talks with no deal. How financial markets are reacting.
Investors are focused on the Strait of Hormuz in the Middle East as it’s critical to global shipments of oil and gas. Trump indicated over social media Sunday that Iran has failed to open the strait to all ships attempting to enter or leave it, and pointed to tolls charged by Iran for safe passage through the waterway, in which it has reportedly laid mines, as extortion.
In a post on his Truth Social platform Sunday morning, Trump said that the U.S. would start destroying the mines laid by the Iranians and that “Any Iranian who fires at us, or at peaceful vessels, will be BLOWN TO HELL!” In the same post, he said the U.S. Navy would “begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz.” He also wrote that he “instructed our Navy to seek and interdict every vessel in International Waters that has paid a toll to Iran,” adding that, “No one who pays an illegal toll will have safe passage on the high seas.”
The U.S. Central Command said late Sunday it will begin a blockade “against vessels of all nations entering or departing Iranian ports and coastal areas” starting Monday.
The spike in oil prices amid the Iran conflict, which began at the end of February and has disrupted the flow of oil tankers through the Strait of Hormuz, has resulted in Americans paying higher prices at the gasoline pump. The national average as of Sunday was $4.125, according to AAA.
“Enjoy the current pump figures,” said MB Ghalibaf, speaker of the Islamic Republic of Iran’s parliament, in a post on X on Sunday. “With the so-called ‘blockade’, Soon you’ll be nostalgic for $4-$5 gas.”
Over social media on Sunday, Trump highlighted his concern about Iran’s pursuit of a nuclear weapon. He posted that after the weekend meeting with Iran in Islamabad, “there is only one thing that matters – IRAN IS UNWILLING TO GIVE UP ITS NUCLEAR AMBITIONS!”
As investors continue to monitor a fragile cease-fire agreement between the U.S. and Iran as the two countries negotiate a peace plan, inflation worries linger due to the spike in oil prices.
After higher gasoline prices led to a jump in U.S. inflation in March, stock-market investors will be watching first-quarter earnings season closely for ripple effects from the Iran conflict.
See: April’s stock-market rebound is about to face its first major test as earnings season swings into gear
The U.S. stock market rose last week, with the Dow Jones Industrial Average DJIA, S&P 500 SPX and Nasdaq Composite COMP all posting gains, according to FactSet data. The S&P 500 ended Friday up 4.4% in April, but still down modestly in 2026 after a big drop in March.
“The announcement of the blockade will likely weigh on markets in the near term as potential encounters between the U.S. Navy and Iran-linked vessels now might cause a flare-up that ends the fledgling ceasefire,” Evercore ISI said in a note to clients on Sunday. “However, we continue to believe that President Trump wants to avoid a return to full-scale hostilities and that this latest move in the direction of escalation is ultimately intended to drive further dialogue.”
Meanwhile, the White House was weighing a resumption of limited military strikes in Iran, according to a report Sunday evening from the Wall Street Journal, citing officials and people familiar with the situation.
-Christine Idzelis
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04-12-26 1906ET
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