Significant positive developments have emerged regarding US-Iran negotiations. On the evening of April 13, the three major US stock indices opened lower but then collectively surged, with the Nasdaq and S&P 500 indices turning positive after initial declines. Reports indicate that on April 13, Pakistani Defense Minister Asif stated that prospects for restarting US-Iran talks still exist, and a new round of negotiations will begin soon. Furthermore, according to US media reports, Pakistan, Egypt, and Turkey will continue talks with the US and Iran in the coming days to bridge differences and push for an agreement to end the war.
The macro trading team at Goldman Sachs believes the most severe tail risks for the market have narrowed significantly. If the "peak pressure" has passed, US stocks could refocus on a forward-looking perspective, trading on expectations of double-digit profit growth. Strategists at Morgan Stanley also noted that accelerating corporate profit growth is providing a cushion for the S&P 500, with US stocks showing signs of being in the "final stage" of an adjustment.
US stocks experienced a broad-based rally. On the evening of April 13, the three major indices opened lower but subsequently surged collectively. The Nasdaq and S&P 500 were the first to turn positive. At the time of writing, the Dow Jones was down 0.36%, the Nasdaq was up 0.19%, and the S&P 500 was up 0.06%.
Major US tech stocks were mixed. Tesla Motors rose over 1%, while Alphabet and Microsoft saw modest gains. Apple fell over 1%, and NVIDIA, Amazon.com, Broadcom, and Meta Platforms, Inc. all experienced slight declines.
US stocks related to AI applications saw a collective rebound. Applovin, Cloudflare, and ServiceNow surged over 5%, while Salesforce and Palantir rose over 3%.
International oil prices retreated rapidly. Brent crude futures briefly fell to $99 per barrel, with gains narrowing to 4%, after surging as much as 9% during the session.
Regarding the news, according to CCTV News, Pakistani Defense Minister Asif said in an interview on April 13 that the prospect of restarting US-Iran negotiations still exists, and a new round of talks will begin soon. The Pakistani Prime Minister stated that the US-Iran ceasefire agreement remains effective, and efforts are underway to resolve some issues between the US and Iran.
Additionally, citing US media reports, Xinhua News Agency reported that Pakistan, Egypt, and Turkey will continue talks with the US and Iran in the coming days to bridge differences and promote an agreement to end the war. The US news website Axios reported that parties still believe an agreement is achievable. The report quoted regional sources saying, "The door is not closed. Both sides are bargaining."
A US official stated that the maritime blockade and the US decision to withdraw from talks in Pakistan are both part of the ongoing negotiation process, with one aim being to prevent Iran from using the Strait of Hormuz as a bargaining chip. According to US officials and regional sources, the core disagreements in this 21-hour round of talks primarily centered on two points: first, the US demand for Iran to freeze uranium enrichment activities and abandon its stockpile of highly enriched uranium; and second, the scale of frozen funds Iran demanded for release, on which no consensus was reached.
Clark Bellin, President and Chief Investment Officer of Bellwether Wealth, stated, "Investors now need to reassess the reasonable valuation of stocks again, as it's clear the Middle East conflict shows no signs of ending soon. The Strait of Hormuz is crucial for oil prices and overall market sentiment. It can be anticipated that the US and Iran will continue intense confrontations in this waterway this week."
According to Xinhua News Agency, following a previous announcement by US President Trump, 10:00 AM Eastern Time on April 13 (22:00 Beijing time) was the effective time for the US military's "blockade order" on Iranian ports. Iran stated the US move was "bluffing." Several countries expressed opposition to the US "blockade order."
Iran's Armed Forces Central Command for Khatam al-Anbiya stated that the security of ports in the Persian Gulf and the Sea of Oman "either belongs to everyone or to no one." Iranian media cited sources saying that if the US military takes action in the Strait of Hormuz, the US would also "lose the Strait of Mandeb." Iranian political analysts pointed out that, judging from the US-Iran Islamabad talks and the latest US measures, the US is clearly not a "negotiator." For Trump, the negotiation table is meant to convey the US government's directives, and Iran will not make any concessions to the US on matters of national interest.
Goldman Sachs and Morgan Stanley issued their latest comments. Goldman Sachs macro traders Rikin Shah and Cosimo Codacci-Pisanelli noted in a recent report that, although details and stability of the US-Iran ceasefire remain questionable, Iran's demonstrated willingness to negotiate is a key signal helping to reduce extreme downside tail risks. For the stock market, this shock is overall characterized as an inflation shock rather than a growth shock. If the "peak pressure" has passed, the stock market could refocus on a forward-looking perspective, trading on expectations of double-digit profit growth.
Regarding central bank policy, Goldman Sachs believes the US-Iran ceasefire reduces the urgency for major global central banks to take emergency action, but the transmission of energy prices to inflation continues, and a "hawkish" tendency has not completely subsided. Among them, the probability of a Fed rate hike is lowest. However, the tail risk of a large-scale rate hike cycle has been significantly reduced, and interest rate volatility is expected to continue declining.
Last week's strong non-farm payroll data eased market concerns about the US labor market. The three-month trend wage growth is close to the break-even level calculated by Goldman Sachs' commodity research team. Overall, the possibility of near-term growth risk in the US is low. Front-end rates should remain subdued in the short term, and realized volatility will stay low.
Morgan Stanley strategists stated that accelerating corporate profit growth is protecting the S&P 500 from deeper declines while also masking a broader correction in the US stock market. The team led by Michael Wilson pointed out that resilient profit performance, coupled with continued economic recovery, is why the S&P 500 has declined less than 10% since hitting a record high in January.
They believe that beneath the surface, the stock market is showing signs of being in the "final stage" of an adjustment. There are better indicators for assessing the US stock pullback: the price-to-earnings ratio of the S&P 500 has fallen 18% from its peak last October, while more than half of the stocks in the Russell 3000 index have declined by at least 20%.
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