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Pro: Iran deal doubts
Traders cheered President Donald Trump's signing of an Iran deal memorandum, but Wall Street remains cautious about whether the conflict will truly end. Trump announced Sunday an agreement to end the monthslong U.S.-Iran conflict, with a memorandum of understanding signed electronically and expected to be formally signed Friday in Switzerland. All three major U.S. stock indexes rallied Monday, pushing the Dow to a record. U.S. crude fell below $80 per barrel for the first time since early March after Trump said the Strait of Hormuz would open and the naval blockade of Iran would end. However, several strategists warned the deal may be temporary. Piper Sandler's Jan Stuart noted contradictions and lack of detail, while colleague Andy Laperriere said the 60-day negotiation round likely needs extension and could collapse if Iran doesn't concede on nuclear energy. He doubts Iran will agree to a toll-free Strait. Height Capital Markets' Benjamin Salisbury said the MOU may mirror interim deals with calming effects but no durable resolution. Investors will watch Strait of Hormuz traffic, which nearly shut down since the war began. Evercore ISI's Sarah Bianchi said normalizing traffic will require time for de-mining and restoring security confidence. UBS analyst Henri Patricot predicted Brent crude will stay at $85/barrel through Q3, with demand rebound limiting downside. Some analysts questioned if the deal benefits the U.S., given war-induced inflation and American casualties. 22V Research's Jacob Funk Kirkegaard said the looming November midterms may have forced Trump into an objectively "bad deal," costing the U.S. and Israel credible military deterrence against Iran.