President Donald Trump formally informed Congress on May 1, 2026, that military hostilities with Iran "have terminated," a declaration timed to the 60-day deadline under the War Powers Resolution of 1973. The announcement provided markets and investors with a clearer geopolitical signal heading into May, triggering a broad rally in risk assets.
War Powers Clock Reset: Administration Declares Hostilities Over
Trump sent a letter to House Speaker Mike Johnson and Senate President pro tempore Chuck Grassley stating that the hostilities that began on Feb. 28, 2026, "have terminated." The White House argued that no new congressional authorization is required for the current U.S. military posture in the Middle East. The conflict, part of what some reports called "Operation Epic Fury," involved U.S.-coordinated strikes with Israel targeting Iranian nuclear facilities, missile programs, military infrastructure, and leadership sites. Iran retaliated and briefly threatened the Strait of Hormuz. A ceasefire took effect on April 7, 2026, and has since been extended with no direct exchanges of fire between U.S. and Iranian forces. The U.S. maintains a naval blockade to restrict Iranian oil exports while negotiations for a permanent deal continue through third-party mediators, including Pakistan.
Trump told reporters this week that Iran had delivered a new proposal but he was "not satisfied with it," describing Iran's leadership as "very disjointed" and "fractured." He outlined two paths forward: a negotiated deal or military escalation, adding he would "prefer not" the latter "on a human basis" but left the option open. Trump also called the War Powers Resolution "unconstitutional," a position he has held previously. Defense Secretary Pete Hegseth previewed the legal interpretation in Senate testimony, arguing the ceasefire effectively pauses the 60-day clock. A senior administration official stated: "For [War Powers Resolution] purposes, the hostilities that began on Saturday, Feb. 28, have terminated."
Democrats pushed back. Sen. Tim Kaine argued the U.S. naval blockade constitutes ongoing hostilities and that the interpretation stretches the law. Senate Republicans blocked Democratic efforts to force a vote on authorization. Congress adjourned without acting.
Markets Rally: Nasdaq Hits Record, Bitcoin Surges
Markets responded positively to the easing geopolitical signals and a strong earnings season. The Nasdaq Composite closed at 25,114, up 222 points and a record high. The S&P 500 gained 21 points to close at 7,230, while the Dow Jones Industrial Average slipped 153 points to 49,499. More than 80% of S&P 500 companies reporting this season beat earnings estimates. Oil prices pulled back, with Brent crude settling near $108 per barrel and WTI near $99.55, down roughly 2.6% on the day.
Gold held in the $4,580 to $4,636 per ounce range, reflecting persistent safe-haven demand tied to inflation concerns and ongoing Middle East uncertainty. Silver traded near $72 to $75 per ounce. Both metals remain at historically elevated levels.
Bitcoin stood at around $78,311, up 2.52% on the day at Wall Street's close, as broader risk-on sentiment lifted equities and crypto in tandem. Bitcoin's market dominance held near 60%. Ethereum gained 1.88% to $2,303. Other top performers in the 24-hour window included hyperliquid (HYPE), up 4.04%, and dogecoin (DOGE), up 2.96%. Most of the top 20 crypto assets saw gains. After a 13% gain in April, Bitcoin spiked over $2,000 on the first day of May to reach an intraday high near $79,000, wiping out approximately $120 million in bearish positions over 24 hours, according to Coinglass data.
Economic Outlook and Remaining Uncertainty
The U.S. economy grew at a 2.0% annualized rate in Q1 2026, rebounding from 0.5% growth in Q4 2025. Business investment, consumer spending, and artificial intelligence (AI)-related tailwinds supported the expansion. The Federal Reserve held its target rate steady at 3.50% to 3.75%, citing elevated uncertainty from Middle East developments and inflation running above the 2% target. Trump has tied the conflict's full resolution to lower energy costs, telling reporters that oil and gas prices will "come tumbling down" once the war concludes.
The ceasefire remains intact but fragile. The U.S. naval blockade of Iranian oil exports continues, and Iran retains partial influence over the Strait of Hormuz. Negotiations are ongoing by phone. The move to declare hostilities terminated effectively resets the War Powers clock without ending the broader standoff, preserving flexibility for both renewed diplomacy and, if Trump chooses, future military action. While the immediate geopolitical risk has eased, markets remain watchful for any escalation, particularly regarding oil supply disruptions and further inflationary pressure.