'Risks persist despite peace push': What smart people in markets are saying about the US peace plan to end the Iran war

• Markets reacted positively to reports that the US sent Iran a 15-point peace plan on Wednesday.
• Oil prices slumped on the news, helping to drive a fresh rally in stocks.
• Market pros say uncertainty will likely remain as a headwind to markets.

Markets see a break in the clouds on Wednesday, with investors sending stocks higher and oil lower as reports emerge that the US has sent a peace plan to Iran.

US stocks popped after markets digested a New York Times report that said the US sent Iran a 15-point peace plan via Pakistan, which included a 30-day ceasefire while negotiations to end the war continue. If accepted, the plan could signal the beginning of the end of the war in the Middle East, which has rattled investors and sparked fear about the economic fallout from soaring oil prices.

The plan includes proposals like Iran reopening the Strait of Hormuz and dismantling some of its nuclear sites.

But Iran's Far News, its semi-official news agency, said the country was rejecting the proposal. Iranian officials told mediators they suspect Trump's push for peace talks is a ruse, a person familiar with the matter told Axios. The nation also denied comments made by Trump earlier this week that the US and Iran were having "productive" talks.

Market pros say that the uncertainty is likely to continue hanging over investors. Here's what smart people had to say about the latest peace plan.

JPMorgan: Expect markets to chop sideways

Strategists on JPMorgan's market intelligence team said they were closing their tactically bearish call on stocks and had shifted to a neutral stance. Yet, the bank is still expecting more volatility.

"The thinking here is that escalation is what will drive markets lower from here," strategists wrote in a note to clients. "Barring escalation, we expect markets to chop sideways, but it does seem more likely that we will get a decisive move shortly, either steps toward a ceasefire or another wave of escalation."

Strategists also highlighted multiple concerns related to the 15-point plan, which didn't appear to mention how the Strait of Hormuz would be reopened. It was also unclear whether Iran would drop its previous requests, such as its demand for reparations, they said.

Bespoke Investment: Stocks will continue to whipsaw

Global stocks look like they're in "rally mode" after taking in news of the peace plan, but the move higher is already starting to lose steam due to the uncertainty of the situation, according to Paul Hickey, the co-founder of Bespoke Investment Group.

"Some of the air has come out of the balloon as we type this, though, on reports that Iranian officials have rejected the US terms delivered via Pakistan. There's really no way to know at this point what the facts are regarding the state of negotiations, as neither side has any real incentive to discuss them through the press, so expect more whipsaw action as things continue to progress," Hickey wrote in a note on Wednesday.

"The bottom line is that while Iran still holds some cards, the chips are stacked heavily against them," he added.

Tom Lee: Plan could be a turning point for stocks

Tom Lee, the head of research at Fundstrat, said that, if reports about the plan were accurate, the news could represent a "turning point" for stocks.

But there's still a huge amount of uncertainty, he said, adding that investors seemed "wary" of developments in the war.

"We are in the fog of war, so I am not entirely sure what is credible," Lee wrote in a note on Wednesday. "I am sure we will hear conflicting factions and conflicting reports."

David Rosenberg: Broader war risks will remain

David Rosenberg, the top economist and president of Rosenberg Research, said broader risks surrounding the war would continue to hang over markets.

"Wider War Risks Persist Despite Peace Push," Rosenberg wrote in a client note. "The White House has sent Iran a 15-point peace plan, delivered by Pakistan, but so far all the regime has responded with is more attacks on Israel and the rest of the Gulf region."

He also pointed to the sharp drop in oil prices on Wednesday. Brent crude, the international benchmark, dropped more than 5% to trade around $94 a barrel.

"The oil market seems to be taking these 'talks' seriously," Rosenberg said.

Trade Nation: Oil prices could see first signs of stability

David Morrison, a senior market analyst at Trade Nation, pointed to the sharp drop in crude prices on news of the 15-point plan. Should West Texas Intermediate crude drop below $80 a barrel and Brent crude below $90, that would be a "healthy first step," suggesting oil prices are stabilizing, he wrote in a note on Wednesday.

Morrison said it was unclear how widely the plan has been read by Iranian officials and whether Israel will support the plan, but the news is the "clearest signal" to markets that Trump is working toward a resolution with Iran.

But, should the Iran conflict come to an end soon, that implies Iran's regime will stay in place, which is a negative for Iran's neighbors as well as the US.

"That's not a good outcome. But then neither is a full-blown US/Israeli military invasion. What a mess," Morrison said.

Oxford Economics: Oil could keep rising due to uncertainty

John Canavan, a lead analyst at Oxford Economics, pointed to news of the US's 15-point plan and Trump's recent comments about the war on Truth Social, which suggested that the US and Iran were making progress toward a de-escalation.

"Despite President Trump's recent comments, there are no clear indications of the US/Israel-Iran war winding down. Given the uncertainty, oil prices may yet rise further, adding to the upward shift in inflation expectations and resuming the upward pressure on rates," he wrote in a note on Wednesday.