Stocks Eke Out a Record as Mideast Tensions Linger: Markets Wrap
(Bloomberg) — US stocks held onto record highs as traders digested a flurry of headlines on the conflict in the Middle East, brushing aside warnings that the US-Iran war would continue to linger for months.
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The S&P 500 edged up 0.3%, notching another all-time high after the benchmark closed above the 7,000 mark for the first time on Wednesday. President Donald Trump said prospects for a deal with Iran are “looking very good.” He said he believed Iran had agreed to terms it has long resisted, including giving up ambitions for a nuclear weapon. Tehran has not publicly confirmed it’s made those concessions.
Trump also announced a 10-day ceasefire between Israel and Lebanon. His announcement on Thursday made no mention of Hezbollah. Israeli Prime Minister Benjamin Netanyahu confirmed in a video message that he’d agreed to the truce. The update eased fears of a wider regional conflict that could threaten oil shipments through the Strait of Hormuz, a critical chokepoint for global energy supplies.
The Nasdaq 100 climbed 0.5% to a record high. The early hours of Thursday’s session saw a sharp rally in technology stocks after Taiwan Semiconductor Manufacturing Co.’s upbeat revenue outlook highlighted the resilience of AI chip demand. The gain marked the benchmark’s longest winning streak since 2017.
Brent crude traded around $98.15 a barrel after approaching nearly $100 when some Gulf Arab and European leaders indicated that a US-Iran peace deal will take about six months to be reached, according to people familiar with the matter. Treasury yields rose modestly, with the rate on the benchmark 10-year at 4.31%.
“This is yet another sign of headline fatigue as it relates to the war in the Gulf region,” according to BMO’s Ian Lyngen. “The prevailing consolidation pattern is also suggestive that the influence of fresh geopolitical headlines is waning.”
Adding to market concerns, former Treasury Secretary Henry Paulson called on US authorities to prepare a back-up plan in order to avert a potential collapse in demand for the $31 trillion market for US government debt — an event that he warned would have “vicious” effects.
Meanwhile, delegates at the International Monetary Fund and World Bank meetings in Washington have cautioned that markets are underestimating the war’s economic damage.
“Investors have become conditioned to buy every dip,” said Michael Bell, head of market strategy at RBC BlueBay Asset Management. “The outlook is binary, either Hormuz reopens soon or it doesn’t. With equity markets already assuming Hormuz will reopen soon, the upside is perhaps limited.”
What Bloomberg’s Strategists Say:
“A record high for stocks doesn’t imply that risks have returned to where they were in January; investors just seem to be underpricing how much riskier the world is now. The S&P 500’s fresh peak suggests, on the surface, that risks have diminished below where they were at the end of February. Yet investors are still demanding a higher risk premium now versus then.”
—Sebastian Boyd, Macro Strategist, Markets Live
For the full analysis, click here.
Microsoft Corp. outperformed among the Magnificent Seven with a 2% advance. Tesla Inc. slumped on news that the firm’s Cybertruck sales have been propped up by Elon Musk’s other companies, including SpaceX. Allbirds Inc. tumbled after soaring on Wednesday.
Claudia Panseri of UBS Wealth Management said her exposure to artificial intelligence stocks is focused on the US and China and is “more selective” than two years ago. “We also prefer companies which are still investing using cash, rather than companies issuing bonds,” Panseri told Bloomberg Television.
In economic data, initial jobless claims for the week through April 11 fell more than expected, reinforcing investor confidence in the economy’s resilience.
Corporate News:
Charles Schwab Corp. reported first-quarter assets that topped estimates as the brokerage continued to attract the wealth of retail investors even amid geopolitical uncertainty. Sales of Tesla Inc.’s Cybertruck have been propped up in recent months by Elon Musk’s other companies, an unusual arrangement that further indicates the polarizing pickup is failing to appeal to everyday buyers. PepsiCo Inc.’s quarterly revenue and earnings beat expectations, as the maker of Doritos and Lay’s sees improvement in salty snacks volume following recent price cuts. Pernod Ricard SA expects the war in the Middle East to drive sales down as much as 4% for the year as it continues to struggle with weak demand in the US and China. Taiwan Semiconductor Manufacturing Co. booked a 58% surge in profit, a sign that the Middle East war in its first few weeks did not depress booming AI investment. Elon Musk’s lieutenants have reached out to chip industry suppliers including Applied Materials Inc., Tokyo Electron Ltd. and Lam Research Corp. for his envisioned Terafab, early steps in an audacious and likely arduous attempt to break into the production of cutting-edge chips. EasyJet Plc shares fell the most since 2022 after the UK budget airline warned of a loss in the first half of this fiscal year because of disruptions from the Iran war. Some of the main moves in markets:
Stocks
The S&P 500 rose 0.3% as of 4:01 p.m. New York time The Nasdaq 100 rose 0.5% The Dow Jones Industrial Average rose 0.2% The MSCI World Index rose 0.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro fell 0.1% to $1.1782 The British pound fell 0.2% to $1.3531 The Japanese yen was little changed at 159.15 per dollar Cryptocurrencies
Bitcoin rose 0.8% to $75,474.38 Ether was little changed at $2,362.79 Bonds
The yield on 10-year Treasuries advanced three basis points to 4.31% Germany’s 10-year yield declined one basis point to 3.03% Britain’s 10-year yield advanced three basis points to 4.85% Commodities
West Texas Intermediate crude rose 2.5% to $93.54 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Andre Janse van Vuuren, Neil Campling, Subrat Patnaik and Ruhell Amin.
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