President Trump’s fixation on financial markets as the measure of his stewardship of the economy came into focus again this week when he vacillated on his outlook for the length of the war with Iran as oil and stock prices swung wildly.
As U.S.-led strikes on Iran intensified last weekend, threatening global energy supplies, oil prices surged. Brent crude, the international benchmark, rose as much as 65 percent from the start of the war, to nearly $120 a barrel. Stocks dropped.
By Monday afternoon, Mr. Trump was signaling to markets that the military offensive he called a “little short-term excursion” was nearly done.
The war with Iran is “very complete, pretty much,” he told CBS.
The S&P 500 jumped 0.5 percent in the blink of an eye and 0.5 percent more through the close of trading for the day. The index had been on track to close at a loss for the day. Instead, it notched a 0.8 percent gain, its best single-day performance in more than month, and oil prices eased back below $90 a barrel.
Then, at a news conference around 5:30 p.m., Mr. Trump tacked back. The war wasn’t about to end, it was ahead of schedule, he said.
It was reminiscent of how Mr. Trump backed down from the maximalist version of his tariff campaign last April, after the stock market plunged and the bond market quaked.
“He cares about markets. He cares about, in particular, the stock market. It makes sense that he wants to calm fears,” said Kristina Hooper, chief market strategist at Man Group, an investment manager.
But there are differences, Ms. Hooper noted, between the stock market’s drop and then rally in response to Mr. Trump’s tariff moves and tumult stemming from war with Iran. Even if he says the war is over, Iran might keep fighting. U.S. stocks have held steady, dropping slightly on Tuesday even as Iranian officials kept up defiant statements about the conflict.
“I think there is a real optimistic bias in markets,” Ms. Hooper said.
Still, for many households, actions geared to calm markets, or juice them to new highs, do not create the sort of relief for which Americans have been clamoring on health care, housing or the overall cost of living. Instead, Mr. Trump’s tariffs — and, most likely, the oil price surge — have aggravated inflation and eroded consumer sentiment, according to economists.
“The stock market doesn’t solve consumers’ problems. It doesn’t solve many of our problems,” said Michael Kantrowitz, chief investment strategist and head of portfolio strategy at Piper Sandler, an investment bank.
The maxim that “the stock market is not the economy” was especially popular from 2023 to 2025: The S&P 500 index was enjoying a hot streak of record highs. But in each of those years, consumer sentiment was dour. Households and smaller businesses struggled with higher prices, and workers with a slowly weakening jobs market that by 2025 was adding few jobs outside of health care.
This year, the disconnect has ended. Investors are rattled, too.
At first, it was over concerns about artificial intelligence and overvaluation of tech stocks. Now, investors are trying to price in the negative financial effects of the war. And for the first time in a while, the stock market appears to be mirroring the sour mood of the country: It’s flat.
The S&P 500 has quivered between being up or down a percentage point since the start of the year. Stocks recouped some losses after Mr. Trump’s dovish comments on Monday, though he later said strikes could continue.
Oil prices have cooled somewhat but remain elevated, near $90 a barrel, compared with $60 levels last month. Economists expect inflationary impacts on airline fares, restaurants, gas prices and other products.
Henrietta Treyz, director of economic policy at Veda Partners, an investment research firm, said the president was often still focused on priorities from his first term: cutting taxes, deregulating industry and “using his bully pulpit” to influence corporate investment and deals.
But now, Ms. Treyz said, “the American public is worried about affordability, housing, high electricity prices and high grocery bills.”
One challenge for the White House, now that stocks are flat, is that the administration has pointed to rising stock valuations as an indicator of an increasingly healthy business environment spurred by its tax and regulatory policies.
But most Americans disapprove of how Mr. Trump has handled the economy. And it’s not clear to many analysts to what extent recent economic growth is a result of his policies rather than a confluence of forces, including tech investments in A.I. and nascent productivity gains from it.
“There’s this weird combination of low labor market growth and solid overall growth, but I wouldn’t link any of that back to tax cuts and deregulation,” said Padhraic Garvey, a head of research at ING, the global investment bank.
A ‘Problem From the Beginning’
During his State of the Union address in February, Mr. Trump acknowledged that there were limits to economic policymaking premised on boosting markets to drive growth.
“Because the stock market has done so well, setting all those records, your 401(k)s are way up,” he said. “Yet half of all of working Americans still do not have access to a retirement plan with matching contributions from an employer.”
As a solution, Mr. Trump pledged in the speech, absent further details, that next year the administration would give “these often forgotten” workers “access to the same type of retirement plan offered to every federal worker,” with up to $1,000 each year in federal contributions “as we ensure that all Americans can profit from a rising stock market.”
Even if such a plan got traction in Congress, it would by its nature not offer the more immediate financial relief many households are looking for.
“This was kind of the problem from the beginning,” said Neil Dutta, the head of economics at Renaissance Macro Research. “Even the big tax bill from last year wasn’t new policy — it was just removing a headwind,” avoiding the expiration of tax cuts enacted during Mr. Trump’s first term.
The president has signed into law other tax benefits on top of the tax cut extension, such as “no tax on tips or overtime” rules. But bank economists say that their macroeconomic effects may be narrow and that boosts from this spring’s tax refunds may fade later this year.
Federal Reserve officials have indicated that persistent inflationary pressures from tariffs are restricting their ability to reduce interest rates, as Mr. Trump has urged them to do. And this, in turn, is a large part of why mortgage, bank and auto loan rates remain high.
The president, at the urging of members of his staff and Republican lawmakers, has tested out a “pivot to affordability,” Ms. Treyz said, a term Mr. Trump had called “a Democratic scam.”
But his proposals — imposing lower credit card rates, banning large corporate entities from buying single-family homes or tariff rebates — have not gained much steam in Congress. And on health care, the president has signed into law deep cuts to medical coverage and food stamps that are likely to worsen cost-of-living challenges for lower-income households.
A coalition of conservative, liberal and libertarian-leaning economists has encouraged the White House to focus on other priorities: stimulating housing construction, reducing budget deficits, doing more to reduce drug prices and rolling back more tariffs.
At the White House last week, as part of his affordability pivot, Mr. Trump gathered tech leaders for a “ratepayer protection pledge,” to ward off fears among voters that newly constructed data centers for A.I. projects would raise their electricity prices.
Energy market analysts said they doubted the basic mechanics of how such a pledge would work. Trump administration officials acknowledge the pledge is voluntary.
The data centers are an enormous cost for tech companies. And a key part of the slouchiness in the stock market, Mr. Garvey of ING said, is still connected to investors who are selling off tech stocks out of fears that all of the heavy spending on A.I will not bear fruit.
But corporate earnings for this quarter are expected to be strong, led by tech. And against the grain of the geopolitical moment, most traders and portfolio managers appear to believe that the market will power past the war with Iran.
Top strategists at banks are still projecting higher market valuations this year. If they are right, the previous disconnect between stocks in a bull market and a glum middle and working class could quickly re-emerge.
“Markets are coldhearted. They’re not thinking about humanity necessarily — they’re not thinking about the bottom half,” Mr. Garvey said. “What matters is the aggregate. Politically, one may disagree with that, but markets don’t care.”
Talmon Joseph Smith is a Times economics reporter, based in New York.
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