The Dow Jones Industrial Average closed up 1,125 points on Tuesday, a gain of 2.49 percent and its best session since May, after President Trump told reporters that the United States would leave Iran "in two weeks, maybe three" [1]. The S&P 500 rose 2.1 percent. The Nasdaq, led by tech stocks that had been punished throughout March, surged 3.8 percent [2]. Oil fell 3 percent on the withdrawal signal. Gold retreated from its recent highs.

As this paper documented when March ended as the worst month for equities since 2022, the pattern this rally extends is more interesting than the rally itself.

The market has now rallied on every major Trump statement about the Iran war, regardless of whether the statement signaled escalation or de-escalation. It rallied when the administration announced the April 6 deadline to obliterate Iran's energy grid — because the deadline implied a negotiating window. It rallied when Hegseth said the Strait of Hormuz was no longer essential — because that implied flexibility. It rallied when Trump said he wanted to "take the oil" — because some traders read that as accelerating toward a conclusion. And it rallied Tuesday on "leave in 2-3 weeks" — because that implied the end was near [3].

The through-line is not optimism. It is the market's preference for any signal over no signal. In a war where the stated aims have changed seven times in 32 days, every new statement creates a tradeable event. The direction of the statement matters less than its existence. A market that has been whipsawed since February is desperate for resolution in any direction, and it will seize on each new presidential utterance as if it were the definitive one — until the next one arrives.

Reuters attributed Tuesday's rally to "speculation about a potential de-escalation in the Middle East" [1]. CNN called it a rally "on hopes for an end to war with Iran" [4]. Forbes cited Trump's New York Post interview suggesting military forces would not need to be in Iran "much longer" [3]. Each framing is accurate on its own terms. None accounts for the fact that Sunday's "take the oil" was the opposite of de-escalation, and the market absorbed that too.

Warren Buffett, in a Berkshire Hathaway shareholder letter excerpt circulated Tuesday, wrote that "current market valuations lack the margin of safety that prudent investors require" [5]. The statement was not specifically about the Iran war, but its timing was not accidental. Berkshire has been building its cash position throughout Q1.

The bond market was more cautious. The 10-year Treasury yield fell only 4 basis points, suggesting that fixed-income traders assigned lower probability to the "leave in 2-3 weeks" statement than equity traders did. Brent crude, at $105 a barrel, remains elevated enough to indicate that oil markets are pricing in continued disruption even if equities are pricing in peace.

The structural problem is that the market's rally-on-anything behavior has become self-reinforcing. Each surge draws in retail traders who fear missing the bottom. Each drawdown triggers algorithmic selling. The result is a market that is responding to headlines rather than fundamentals — a condition that works until the headline and the reality diverge too far. That divergence is five days away. On April 6, at 8 p.m. Eastern, the president's deadline for Iran to meet his terms expires. If Iran has not moved and the United States does not strike, the market will need to decide which Trump statement it believes. For the first time, there may not be a new one to choose.

-- Hendrik Van Der Berg, Brussels