Donald Trump’s decision to join Israel in launching military action against Iran has ended the ‘TACO’ era - ‘Trump Always Chickens Out’ - for US financial markets.
A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, US. REUTERS/Brendan McDermid/File Photo
Unlike past tariff threats or Greenland rhetoric, this is kinetic conflict - with immediate macroeconomic consequences. Gasoline prices are rising. Tanker traffic through the Strait of Hormuz is disrupted. Consumer confidence is faltering.
The S&P 500’s recent selloff lacks the swift V-shaped recovery seen after April 2025’s tariff shock. Now, 80% of stocks trade below their 50-day moving averages. Equal-weighted indices lag capitalization-weighted ones - signaling broad-based weakness.
Normalcy will not return soon. High valuations and fragile sentiment mean this geopolitical shock plays out differently than Iraq or Ukraine. Explosions in the Middle East aren’t negotiable soundbites - they’re market fundamentals.