What Happened?
A number of stocks jumped in the afternoon session after President Trump reversed course on a military escalation against Iran that wiped $1.2 trillion from the market earlier in the day.
The session opened under heavy pressure after Trump posted on Truth Social that the U.S. would attack Iran "VERY HARD TONIGHT" and threatened to seize the country's oil assets. Then, around midday, he posted again cancelling the planned strikes. His statement said discussions had been brought to "the highest level of Iranian leadership" and that final points of a peace deal had been "approved by all parties involved," citing thirteen countries including the U.S., Israel, Saudi Arabia, UAE, and Qatar. A signing date would be "announced shortly."
The market moved the moment the post landed. The S&P 500 jumped 1.4%, the Dow surged, and the Nasdaq gained 1.8%. Oil fell more than 3%. The 10-year Treasury yield eased from 4.55% to 4.47%. The read-through is simple: lower oil means lower inflation means less pressure on the Fed to hike. Iran's disruption of the Strait of Hormuz was the single largest driver of the 4.2% annual inflation print reported earlier in the week as energy alone accounted for more than 60% of May's monthly CPI increase. A ceasefire that reopens the Strait unwinds that pressure immediately, potentially taking the December rate hike that markets were fully pricing in off the table.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Apparel Retailer company Gap (NYSE: GAP) jumped 2.9%. Is now the time to buy Gap? Access our full analysis report here, it’s free.
- Beauty and Cosmetics Retailer company Sally Beauty (NYSE: SBH) jumped 2.7%. Is now the time to buy Sally Beauty? Access our full analysis report here, it’s free.
Zooming In On Gap (GAP)
Gap’s shares are quite volatile and have had 15 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 22 days ago when the stock gained 6.6% on the news that the company announced it appointed Donald Kohler as the new President and CEO of its Banana Republic brand, effective in July 2026.
Kohler is a seasoned leader with over three decades of experience across the luxury, premium, and specialty retail markets. His appointment is intended to guide Banana Republic as the brand seeks to build on its momentum and elevate its position in the market. This leadership change signals a key move by Gap Inc. to strengthen one of its core brands.
Gap is down 13.6% since the beginning of the year, and at $21.77 per share, it is trading 25.3% below its 52-week high of $29.13 from February 2026. Investors who bought $1,000 worth of Gap’s shares 5 years ago would now be looking at only $673.66.
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