U.S. stocks showed modest gains during Monday's midday trading, with the S&P 500 and Nasdaq Composite reaching new intraday record highs. Investors are preparing for key economic data scheduled for release this week, including the April Consumer Price Index and retail sales reports. Oil prices climbed following former President Trump's rejection of an Iranian proposal.
The Dow Jones Industrial Average rose 14.92 points, or 0.03%, to 49,624.08. The Nasdaq Composite gained 101.67 points, or 0.39%, to 26,348.74. The S&P 500 increased by 24.84 points, or 0.34%, to 7,423.77.
Market sentiment was tempered by uncertainty in the Middle East. Over the weekend, former U.S. President Donald Trump rejected a peace proposal from Iran, calling it "completely unacceptable." This move pushed oil prices up by approximately 3%, with rising energy costs adding extra pressure to the equity markets.
The primary focus for markets this week is the April CPI data scheduled for release on Tuesday. Economists forecast the year-over-year CPI increase to rise to 3.7% from 3.3% in March, with a month-over-month increase of 0.6%. Core CPI is expected to rise 2.7% year-over-year and 0.3% month-over-month. Should inflation figures exceed expectations, it could further reduce market bets on the Federal Reserve cutting interest rates this year. Additionally, the April retail sales data due on Thursday is also closely watched, with the month-over-month growth rate expected to slow to 0.5% from 1.7% in March.
On the earnings front, companies including Cisco, Alibaba, and Applied Materials are set to report their results this week. Concurrently, Federal Reserve Chair Jerome Powell's term is set to end on Friday, with the Senate expected to confirm Kevin Warsh as his successor this week, a policy transition process that is also drawing market attention.
Last Friday, both the S&P 500 and Nasdaq Composite closed at record highs.
Markets continue to monitor the latest developments in U.S.-Iran relations. Iran submitted a new proposal to U.S. negotiators, with its core being an end to the months-long conflict. The semi-official Tasnim news agency, citing informed sources, reported that this counter-proposal emphasizes the need to end the war on all fronts and lift sanctions on Tehran.
In response, Trump posted on the social media platform Truth Social, stating he did not like Iran's response and adding that the deal was "completely unacceptable!"
Following Trump's rejection of the Iranian proposal, crude oil futures advanced. Brent crude, the international oil benchmark, surpassed $103 per barrel.
Last week, both major crude contracts recorded weekly losses of around 6%, as markets anticipated an imminent end to the now ten-week-long conflict, which would allow oil to pass through the Strait of Hormuz.
"Oil markets remain a geopolitical headline machine for now, with prices swinging wildly on every comment, rejection, or warning out of Washington and Tehran," said Priyanka Sachdeva, Senior Market Analyst at Phillip Nova.
Amin Nasser, CEO of Saudi Aramco, stated on Sunday that the world has lost about 1 billion barrels of oil over the past two months, and energy markets will need time to stabilize even if oil flows resume.
Shipping data from Kpler showed that three more crude-laden tankers sailed out of the Strait of Hormuz last week with their trackers turned off to avoid Iranian attacks, highlighting a growing trend to sustain Middle Eastern oil exports.
"Even as the acute oil shock fades by the end of 2026, the persistent risk of renewed Strait of Hormuz disruptions, depleted inventories, and diminished policy coordination are expected to keep a geopolitical risk premium embedded in prices," analysts at ANZ wrote in a note on Monday.
ANZ analysts forecast that Brent crude will remain above $90 per barrel throughout 2026 and hold around $80 to $85 per barrel heading into 2027, as demand growth recovers and inventories are gradually rebuilt.
Despite this, some market observers expect U.S. markets to remain resilient amid the uncertainty.
"Due to the Iran war and subsequent oil price shock, the economy may slow relative to its prior path. However, there are much larger structural factors that should leave overall economic conditions much better than many expect," said Rick Rieder, Chief Investment Officer of Global Fixed Income at BlackRock.
This week, investors will focus on April's Consumer Price Index and Producer Price Index, which may offer new insights into how the conflict is affecting inflation. Traders will also monitor earnings reports from companies like Under Armour and Cisco.
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