Analysts warn TACO trade won’t last after an Iran ceasefire wipes out weeks of losses in markets
Fortune • • business
Key Points:
- President Trump announced a two-week ceasefire with Iran, conditioned on Iran reopening the Strait of Hormuz and resuming oil flow, which helped lift global markets despite lingering doubts about the deal's durability.
- Following the announcement, U.S. stock markets rallied with a $1.5 trillion gain; the Nasdaq rose 3.55%, the S&P 500 increased 2.7%, and the Dow Jones gained 2.6%, reversing weeks of losses linked to Middle East tensions.
- Oil prices dropped 16% to below $100 per barrel as the ceasefire eased fears of supply disruptions, contributing to the surge in equities.
- The market rally was attributed in part to the "TACO trade" (Trump Always Chickens Out), a pattern where investors anticipate Trump reversing aggressive policies, which has historically triggered market rebounds.
- Financial experts caution that while the TACO trade has been reliable recently, investors should avoid overreliance on this pattern as it may not hold in future geopolitical developments.
