US Stocks Hold Near All-Time High on Peace Hopes: Markets Wrap
(Bloomberg) — US stocks are holding firm near an all-time high following a rally powered by optimism around a potential peace deal in the Middle East, with traders now eyeing confirmation of new talks.
Futures for the S&P 500 were little changed after the benchmark closed within a whisker of a record. Bank of America Corp. and Morgan Stanley rose in premarket trading as their equity traders posted strong revenue beats. Europe’s Stoxx 600 was 0.2% lower, while China’s mainland blue-chip index became the latest in Asia to recoup losses since the Iranian war began.
Stock and bond markets are increasingly pricing out much of the risk premium built up since the conflict started in late February as the US and Iran look to arrange a second round of negotiations.
The parties are closer to extending a ceasefire and restarting discussions about a longer-term peace deal, the Associated Press reported. President Donald Trump told the New York Post that talks could resume “over the next two days” and said in a Fox Business interview the war is “close to over.”
Brent erased early losses to rise 1% toward $96 a barrel as the US pressed ahead with a naval blockade of the Strait of Hormuz. Treasuries edged lower, with the two-year yield rising two basis points to 3.76%. The dollar posted modest gains while gold fell toward $4,800 an ounce.
“Amid all the uncertainty, I consider it warranted to re-focus on the outlook beyond the war,” said Holger Schmieding, chief economist at Berenberg. “A key driver of markets is that the war-related dash for liquidity is over and partly reversing. That helps the more risky assets.”
Investors have been piling back into stocks even with no clear end in sight to the war, which has choked off around a fifth of global crude supplies and risked a surge in inflation that could still prompt central banks to tighten policy.
Technology shares in particular have been snapped up after lagging the market for much of the year, with the Nasdaq 100 notching its longest stretch of daily wins since 2021. In just the past two sessions, a popular exchange-traded fund that tracks the software industry is up 6.4%. Oracle Corp. has soared 18% and Microsoft Corp. and Palantir Technologies Inc. have gained 6%.
“The US tech sector, including the Magnificent Seven, is much cheaper today than six months ago,” said Lilian Chovin, head of asset allocation at Coutts & Co. “Concerns around the Middle East won’t disappear all of a sudden, but the ability of those companies to generate earnings in a difficult macro environment remains very attractive.”
Earnings Watch
With the earnings season now in full swing, investors will watch for signs of whether the conflict is denting the outlook for earnings and whether corporates and consumers are cutting back on spending amid the uncertainty.
In Europe, luxury firms Hermes International SCA and Kering SA slumped after disappointing sales updates. ASML Holding NV shares fell 3.8%.
“Earnings will be key for fundamental investors to step in and chase or fade,” said Emmanuel Cau, head of European equity strategy at Barclays Plc. With “stocks near year-to-date highs, it feels like easy gains are behind us and fundamentals should prevail again.”
What Bloomberg Strategists Say:
“BofA CEO Brian Moynihan said the bank saw healthy client activity and solid consumer spending, noting that they indicate a resilient US economy. His remarks echo what the other bank heads have indicated in recent days, which may further support risk sentiment.”
— Tatiana Darie, macro strategist. For the full analysis, click here.
Corporate News:
Jane Street Group has taken an additional $1 billion stake in AI cloud services provider CoreWeave Inc. and plans to spend about $6 billion on the company’s technology offerings. Morgan Stanley’s stock traders joined the rest of Wall Street with a record-breaking first quarter. Bank of America Corp.’s traders pulled in the business’s highest quarterly revenue in more than a decade, riding a wave of volatility that pushed the firm’s stock-trading desk to an all-time record. Stellantis NV is discussing reviving a partnership with Dongfeng Motor Corp. that would involve joint car production in Europe and China, according to people familiar with the matter. ASML Holding NV raised its full-year sales forecast as the surge in global artificial intelligence spending fuels semiconductor production and boosts demand for the company’s advanced chipmaking machines. Hermès sales expanded at a disappointing clip as the Birkin bag maker was hit by the disruption caused by the conflict in the Middle East like many of its peers in the luxury goods industry. Robinhood Markets Inc. shares rallied in premarket trading after the US Securities and Exchange Commission gave the go-ahead for sweeping changes to a restriction on day-trading activity by small investors. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 8:16 a.m. New York time Nasdaq 100 futures fell 0.1% Futures on the Dow Jones Industrial Average were little changed The Stoxx Europe 600 fell 0.2% The MSCI World Index was little changed Currencies
The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.1% to $1.1779 The British pound fell 0.1% to $1.3550 The Japanese yen fell 0.2% to 159.14 per dollar Cryptocurrencies
Bitcoin was little changed at $74,187.7 Ether rose 0.7% to $2,332.54 Bonds
The yield on 10-year Treasuries advanced two basis points to 4.27% Germany’s 10-year yield advanced two basis points to 3.04% Britain’s 10-year yield advanced two basis points to 4.80% Commodities
West Texas Intermediate crude rose 1.2% to $92.40 a barrel Spot gold fell 0.6% to $4,814.69 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Neil Campling and Sujata Rao.
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