The stock market has had to absorb too many headlines about a potential U.S.-Iran deal to end the war. The latest came Thursday after the U.S. and Iran reached a 60-day memorandum of understanding to extend a ceasefire between the two countries. That agreement was still pending President Donald Trump's approval. The major stock market averages initially popped but quickly pared those gains. In the past, similar headlines would have sent stocks soaring for several days. This time, however, investors are facing "headline fatigue and an unwillingness to participate in trades around geopolitical signals," according to JPMorgan's trading desk. "While we can see rapid short covering in response to 'optimistic Iran headlines,' it would require a more definitive announcement or signed deal from both governments to prompt a full risk-on rally in stocks." .SPX mountain 2026-05-01 S & P 500 in May Stocks have also risen sharply this month, perhaps making it more difficult for investors to add exposure at what are already elevated levels. Through Thursday's close, the S & P 500 is up nearly 5% in May, hitting all-time highs along the way. The Dow Jones Industrial Average and Nasdaq Composite have gained 2% and 8%, respectively, also reaching record levels. The rally has also broadened beyond Big Tech, with the equal weight S & P 500 climbing 2.4% to all-time highs. The sharp moves higher in stocks, coupled with U.S.-Iran headline fatigue, beg the question: How much can stocks rise once a deal to end the war is announced? For now, JPMorgan traders see "see rising risks of 'defensive hostilities' and think it may be prudent to reduce net exposure or start adding hedges."
