Want to know how the market will react when the US-Iran war finally ends? CNBC’s Jim Cramer said Tuesday’s session will give investors the answer.
The “Mad Money” host said the market “made a move” as stocks finally rose and interest rates fell during Tuesday’s trading, calling the day a “dry run for what will eventually happen.” of S&P500 and Nasdaq Composite They rose 2.91% and 3.83%, respectively, after a number of headlines gave traders hope for a easing of tensions in the Middle East.
The Wall Street Journal reported late Monday that President Trump told aides that the United States is prepared to end military hostilities with Iran even if the Strait of Hormuz remains largely closed. He told the New York Post that the Iran war will probably end soon. Both follow unconfirmed reports that Iran’s president reiterated his willingness to end the conflict on security terms.
“Today we saw what happens when you give peace a chance,” Kramer said. “Maybe this dialogue with Iran is really just an exchange of messages. Maybe it’s pointless. So let’s take today as a dry run of what will ultimately happen when the war ends.”
But Kramer predicted that once the war is truly over, the market will shift in three ways.
First, he pointed out that interest rates will fall, marking a significant reversal in interest rates. 10 year treasury Since the war started a month ago. Yields on the 10-year U.S. Treasury, a benchmark that influences borrowing costs across the economy, have soared on concerns about inflation risks from rising energy costs and a lower probability that the Federal Reserve will cut interest rates in 2026.
“We’re going to see a significant drop in interest rates,” Kramer said. “Oil prices are going down because we know there’s huge inflation coming from the war. Not only are oil prices going up, but there’s also the impact of auxiliary products coming out of the Gulf, fertilizers, polyethylene, aluminum.”
He continued: “We didn’t know before the war that farmers would have to raise prices because fertilizer prices would rise so much. If we allow fertilizer prices to go back up, we can stop harmful food inflation.”
Cramer pointed to Tuesday’s rally and said there will also be a big rebound in growth stocks. Nvidia and marvel. Nvidia and Marvell rose 5.5% and nearly 13%, respectively, during the session.
Kramer said lower interest rates would allow investors to focus on what these high-growth companies are actually doing right, and not on conflicts in the Middle East. He pointed to new strategic partnerships between the artificial intelligence giants, including Nvidia’s $2 billion stake in Marvell.
“Financial managers believe that the price-to-earnings ratio (how much a company pays for its earnings) has been severely compressed by the war,” Kramer added. “If the war ends, we’ll start paying more for stocks in companies we never intended to jump into in the first place.”
Finally, Cramer expects big bank stocks to rise.
There are growing concerns that the war will freeze Wall Street trading. The financial industry will benefit from the end of the dispute and the possibility of further transactions. Case in point: Tuesday’s big winners were large investment banks including: goldman sachs and morgan stanleyprogressed by nearly 5% and 4%, respectively.
