Markets Surged, Then Stumbled: What Happened the Week of April 1
The S&P 500 posted its best day since May on an Iran rumor, then gave it back after Trump escalated. Here is what moved markets this week.
The holiday-shortened trading week ending April 3 delivered more drama than most full weeks. The S&P 500 gained 3.4% over four sessions, the Dow added nearly 3%, and the Nasdaq jumped 4.4%, but the path from Monday to Thursday was anything but smooth. Iran headlines, a presidential address, and a Good Friday jobs surprise gave investors plenty to process over the long Easter weekend.
What Drove the Big Rally on Tuesday?
The week started with a bang. On Tuesday, March 31, the S&P 500 surged 2.91% to close at 6,528.52, its best single day since May 2025. The catalyst was a report that Iranian President Masoud Pezeshkian was open to ending the war, combined with President Trump telling reporters that American forces would leave Iran “in two or three weeks.”
Ten of eleven S&P 500 sectors closed higher. Consumer discretionary, communication services, and information technology led the advance, while utilities was the only sector in the red. Oil prices fell on the prospect of a reopened Strait of Hormuz, and the relief trade pushed risk assets broadly higher.
The momentum carried into Wednesday. The S&P 500 added another 0.7%, and the Nasdaq 100 jumped 1.2% as traders grew more confident that the war was winding down.
Why Did Thursday Turn Volatile?
Then Trump addressed the nation Wednesday evening and changed the tone. He said the U.S. would “hit Iran extremely hard over the next two to three weeks” and pledged to “bring them back to the stone ages.” Futures dropped immediately after the speech. Dow futures fell more than 260 points, S&P 500 futures lost 0.7%, and Nasdaq 100 futures slid 0.8%.
Thursday’s session reflected that whiplash. At their lows, the Dow was down more than 600 points (1.4%), the S&P 500 fell 1.5%, and the Nasdaq dropped 2.2%. But markets clawed back after Iranian state media reported that Tehran was working with Oman on a protocol to monitor ships passing through the Strait of Hormuz. By the close, the Dow had lost just 61 points (0.13%), the S&P 500 eked out a 0.11% gain at 6,582.69, and the Nasdaq finished up 0.18% at 21,879.18.
What Did the Jobs Report Show?
Markets were closed Friday for Good Friday, but the Bureau of Labor Statistics released the March employment report that morning. The headline number beat expectations by a wide margin: 178,000 nonfarm payrolls added versus a consensus estimate of 60,000. That reversed February’s decline of 133,000 jobs and suggested the labor market was more resilient than many feared.
The details were mixed. Health care added 76,000 jobs, construction added 26,000, and transportation and warehousing added 21,000. But the unemployment rate held at 4.3%, and the labor force participation rate stayed flat at 61.9%, meaning some of the improvement came from a shrinking labor force rather than surging demand.
Wage growth was soft. Average hourly earnings rose just 0.2% for the month and 3.5% year over year, both below expectations. For a Federal Reserve watching inflation data closely, that combination of solid hiring and modest wage growth is about as good as it gets.
Where Do Treasury Yields and Oil Stand?
The 10-year Treasury yield finished the week near 4.37%, rising roughly six basis points after the jobs data pushed it higher in the Friday bond session. That move reflects a market pricing in fewer rate cuts. If employment stays firm and energy prices remain elevated, the Fed has less reason to ease.
Oil remains the wild card. Brent crude was near $109 per barrel as of Thursday’s close, well off the $119 peak from early March but still high enough to keep inflation concerns alive. The Strait of Hormuz monitoring protocol is a step toward normalization, but actual reopening for commercial shipping has no confirmed timeline.
Gold continued its rough stretch. Spot gold sat near $4,400 per ounce, down 21% from its January record of $5,594.82. Higher Treasury yields and a stronger dollar have weighed on the metal despite the geopolitical uncertainty that would normally support it.
What Should Investors Watch Next Week?
Monday, April 7, is the first trading day after both the jobs report and the pharma tariff executive order. Markets will need to price in both at once. The jobs number is supportive, but the 100% tariff headline on pharmaceutical imports and additional metals tariff adjustments could reintroduce volatility.
The economic calendar picks up later in the week. March CPI data arrives April 10, and that report will tell us whether the energy price spike is feeding through to broader consumer prices. February CPI showed a 0.3% monthly increase and 2.4% annual rate. If March moves higher, rate cut expectations will shrink further.
Earnings season also begins. Delta Air Lines, Constellation Brands, and Applied Digital report April 8. Delta’s numbers will be especially telling given elevated jet fuel costs and the travel sector’s sensitivity to consumer confidence.
The Iran situation remains the single biggest variable. Markets have priced in cautious optimism that the conflict is winding down, but Trump’s Wednesday speech showed how quickly that narrative can reverse. Any escalation over the weekend could set the tone for Monday’s open.
For a deeper look at how the March jobs report broke down by sector or what the Liberation Day anniversary tariffs mean for portfolio positioning, see our earlier coverage this week.
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