So here's a fun market puzzle for you. On Friday, the S&P 500 closed higher, surging 1.02% to finish at 6,886.24. That's a solid gain. But here's the thing: it happened on the same day the United States began a naval blockade of the Strait of Hormuz. You know, that little waterway through which about a fifth of the world's oil passes. The blockade was announced by President Donald Trump after peace talks with Iran in Islamabad fell apart.
Markets are weird. Sometimes they shrug off what seems like major news. But the question for Tuesday is: will that shrug continue?
To get a sense of the mood, we can look at the prediction markets. Over on the Polygon-based platform Polymarket (POL), the crowd is feeling optimistic heading into Tuesday. The contract for the S&P 500's April 14 open shows 67% of traders betting "Up," following $275,876 in traded volume on the outcome for Monday, April 13.
Why That Number Matters
It matters because it shows where sentiment is leaning in real-time, and because the geopolitical backdrop is incredibly fluid. Trump's blockade announcement initially pushed markets down in early trading on Monday. But then, in a classic twist, the President later claimed Iran was willing to make a deal, which helped push markets back up.
This back-and-forth is showing up in the commodity markets, too. After surging over $100 a barrel, oil prices have declined to $95.70 on Tuesday, recording a 3.41% drop. That's a move worth watching. Meanwhile, according to AAA, the average gas price in the U.S. is now $4.118 per gallon, compared to $3.630 a month ago. So consumers are still feeling the pinch from the earlier spikes.
The Bull Case
So what's the argument for the market opening higher? Well, some of the initial shock might be wearing off. Markets had already declined after the earlier peace talks failed—talks that collapsed with Iran blaming Israel for violating a ceasefire with attacks on Lebanon.
There's also a potential diplomatic off-ramp. Pakistan has reportedly offered to host a second round of negotiations between the U.S. and Iran. This would happen ahead of the expiration of a two-week ceasefire, adding a bit of hope that the situation could de-escalate.
How The Previous Bet Played Out
It's worth looking at how accurate these prediction markets were just yesterday. The S&P 500 opened Monday at 6,806.47, which was well below Friday's close of 6,816.89. That lower open came as markets braced for the reality of the U.S. naval blockade. The April 13 Polymarket bet correctly resolved "Down," meaning the traders who anticipated a lower open were right.
So now we have a new bet for a new day. Will the S&P 500 open up or down on Tuesday, April 14? The prediction market money, for now, is on "up." But as we saw Monday, in a world where headlines can change by the hour, anything can happen.
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