Caution prevails even in second-day rally following huge gains Wednesday
Stocks extended their rebound Thursday, adding to Wednesday’s explosive gains, on continued optimism that a fragile two-week ceasefire agreement between the U.S. and Iran will hold. Yet many on Wall Street are warning that this two-day relief rally may fade. Long-time market watcher Ed Yardeni, who started working on Wall Street in the 1970s, told clients in a report out Thursday that while the war-induced bottom is in for stocks, that doesn’t mean any future recover will come in a straight line. “At the start of this year, we expected the stock market to be choppy in the first half, though we didn’t anticipate the war,” the president of Yardeni Research wrote. “It is likely to remain choppy until ships can sail freely through” the Strait of Hormuz, he said. That turbulence was evident Thursday, when stocks initially traded lower as West Texas Intermediate crude oil one point jumped above $100 a barrel, only to erase those losses and pushed higher at midday. All the major market averages soared Wednesday, with the Dow Jones Industrial Average climbing nearly 3% in its best day since April 2025, as the U.S. and Iran agreed to a two-week ceasefire. .DJI mountain 2026-04-07 Dow Jones Industrial Average since the ceasefire “Just as we’ve aimed not to overreact during sharp market downdrafts, we intend to do the same on strong up days,” Keith Lerner, chief investment officer at Truist Wealth, wrote in a note on Wednesday. “While we continue to see upside, the path higher is likely to remain choppy, given this is a ceasefire rather than a full agreement.” Lerner still expects the market direction to be driven by headlines, adding to volatility. Piper Sandler’s chief market technician Craig Johnson shares a similar view. The market hasn’t gotten an all-clear signal to rally yet, despite Wednesday’s gains. In fact, Johnson recommended on Thursday that investors fade the rally. “Intermediate-term breadth and trends remain defensive and need more time to recover,” he wrote. “Wait for technical confirmation and follow-through days to add positions.” .SPX mountain 2026-02-27 S & P 500 since the outbreak of the war.
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