The TACO

Monday opened with a jolt. At 7:26 a.m. ET, two hours before the opening bell, Trump posted on Truth Social that the U.S. and Iran had held "very good and productive conversations" toward "a complete and total resolution." He ordered a five-day pause on strikes against Iranian energy infrastructure.

Within minutes, Brent crude dropped over 10% to $99.94, its first close below $100 since March 11. WTI fell to $88.13. The S&P 500 surged over 1%. In the time it took to walk from a car to a desk, $1.7 trillion was added to the stock market.

By the time traders got their coffee, Iran had called him a liar, and half the gains vanished. Iran's Parliament Speaker Ghalibaf posted on X that Trump's pre-market announcements were "reverse indicators." If he pumps, short it.

The 15 Points

By midweek, details emerged. The U.S. had delivered a 15-point peace proposal to Iran through Pakistan. The plan offered sanctions relief in exchange for dismantling Iran's nuclear program and reopening the strait. Iran rejected it.

Tehran countered with five conditions of its own, including sovereignty over the Strait of Hormuz. Markets initially held gains on Wednesday as traders processed the diplomacy, but the rejection made it clear. There was no deal framework both sides would accept.

Meta and Alphabet Fall

Thursday brought a second shock from an entirely different direction. A jury found Meta and Alphabet liable for the addictive design of their social media platforms in a trial centered on harm to a young woman.

Meta fell 8% on the day, dragging the communication services sector down 7.2% for the week. That was the largest sectoral decline. Alphabet dropped 8.9%. The rulings had nothing to do with Iran, but they landed in a market with no tolerance for bad news.

The Correction

Friday closed the week with a 793-point Dow decline, pushing the blue-chip index into official correction territory. It was now more than 10% below its February record. The S&P 500 fell 1.67% to 6,368, a seven-month low, marking its fifth consecutive weekly loss. The Nasdaq, already in correction since Thursday, dropped 2.15%.

Brent crude settled at $112.57, its highest close since 2022. The University of Michigan's consumer sentiment reading came in at 53.3, with one-year inflation expectations rising to 3.8%.

The Exhaustion

ECB President Christine Lagarde warned Friday that markets were "overly optimistic" about the war's fallout. She pointed to second-order supply chain effects that investors had not begun to price in, including helium shortages disrupting semiconductor production. "Most people are actually talking about years," she said.

Retail traders, who had spent the prior three weeks buying every dip on every Trump headline, were finally showing signs of fatigue. The pattern was breaking. Each rally was smaller. Each selloff was deeper. The market was running out of believers.

What the Week Revealed

This was the week the market stopped responding to words. Trump's ability to move prices with a Truth Social post had been fading. Traders had begun calling it the "TACO" effect, and it was losing its power. The 15-point plan was rejected. The April 6 deadline loomed.

For the first time, every major U.S. index was in correction simultaneously. The question was no longer whether the damage would spread. It was how deep.