Two weeks ago, stocks were hitting record highs on hopes of a U.S.-Iran ceasefire. This morning, investors woke up to a very different market.
Futures were down across the board. Oil was up almost 6%. And a ceasefire that looked close last week now looks gone.
Iran reimposed controls on the Strait of Hormuz on Saturday. Then it fired at vessels in the waterway. Then the U.S. Navy seized an Iranian ship.
That's the full sequence investors are now pricing in. Dow futures slid 0.4%. The S&P 500 and Nasdaq both moved down the same amount. West Texas Intermediate crude - the U.S. benchmark - rose 5.7% to about $87 a barrel. Brent, the global benchmark, climbed 4.7% near $95.
Oil is still below the $100 level that tends to break things. But the direction is the problem, not just the price.
This week lines up the biggest earnings test of the quarter. Tesla reports. Intel reports. United Airlines reports. These are the three names that could tell investors whether demand is holding up or starting to crack under oil shock and inflation risk.
Tesla in particular is in a tight spot. Higher oil prices usually help EV makers. But a slowing economy hurts big-ticket buyers. Two forces pulling in opposite directions, and the numbers land Wednesday.
United Airlines is the cleanest read on how much the war is hitting travel demand. Airlines are the second-biggest buyer of oil-based fuel after the military. Jet fuel prices ride with crude. If fliers kept flying despite the ceasefire scare, the stock goes up. If they didn't, it doesn't.
Peace talks in Islamabad are the macro hinge. Earnings are the micro hinge. Both land this week. The playbook is the same as last week, just flipped: buy the dip if talks progress, hedge if they don't.
The ceasefire rally took two weeks to build. It fell apart in one weekend.
Source: Yahoo Finance
