US-Iran Deal Could Trigger S&P 500 Sell-Off as Positioning Reverses, Nomura Warns

A credible U.S.-Iran agreement that reopens the Strait of Hormuz could spark a sharp S&P 500 pullback, Nomura strategist Charlie McElligott warned on May 28, 2026, challenging the consensus that such a deal would lift risk assets. Market dynamics, not geopolitics, are the concern. A rally driven by aggressive call-option buying has created a gamma squeeze, pushing the S&P 500 up 15.9% and the Nasdaq 24.5% since late March. A deal could trigger a violent rotation out of overcrowded technology and semiconductor shares—whose surge has been amplified by dealer hedging—and into beaten-down cyclicals and value stocks. With tech’s heavy index weight, any such shift would pressure the broader market. Goldman Sachs data shows S&P 500 short interest as a percentage of market cap has reached its highest since 2011, intensifying the risk of a short squeeze-led reversal. McElligott added that even without geopolitical news, waning demand for mega-cap tech call options may signal an impending sell-off.