Despite fluctuating headlines regarding U.S.-Iran peace negotiations over the past week, two of the three major U.S. stock indices reached new all-time highs, with all three posting gains for the third consecutive week. Data showed the S&P 500 rose 1.2% on Friday, bringing its weekly advance to 4.5%. The tech-heavy Nasdaq Composite climbed 1.5% on Friday, finishing the week up 6.8%. The Dow Jones Industrial Average, which was the only major index not to set a new record last week, increased 1.8% on Friday, resulting in a 3.2% weekly gain.
The Strait of Hormuz reopened and then closed again! Middle East tensions escalated once more. The rally in U.S. stocks continued on Friday, primarily driven by Iran's announcement that it was reopening the Strait of Hormuz. U.S. President Trump expressed "gratitude" but simultaneously posted that the "maritime blockade on Iran will remain in effect." Within 24 hours, Iran reversed its stance, declaring it had resumed control over this critical global energy transit route. According to British sources, shipping through the Strait of Hormuz stalled again on the evening of April 18. Prior warnings via radio communications indicated that Iranian armed forces had reinstated "strict management and control" over the strait.
The public relations department of the Iranian Islamic Revolutionary Guard Corps Navy reported on the evening of April 18 that multiple vessels had transited the Strait of Hormuz the previous day under its command and coordination. However, due to the U.S. violating the ceasefire agreement by not lifting the blockade on Iranian vessels and ports, the Strait of Hormuz would be closed from that evening until the blockade is removed. Iran warned all vessels in the Persian Gulf and the Gulf of Oman not to leave their anchorages, stating that any approach toward the Strait of Hormuz would be considered cooperation with the enemy, and violating ships would become targets. The statement also notified all vessels and their owners to obtain information solely through official Iranian channels, dismissing President Trump's remarks regarding the Strait of Hormuz and the Persian Gulf as "utterly lacking in credibility."
On the same day, the British maritime security firm Pioneer Technologies released a report detailing attacks on three vessels near the Strait of Hormuz, involving one oil tanker, one cruise ship, and one container ship. Two of the vessels were explicitly warned and fired upon by the Iranian Islamic Revolutionary Guard Corps, while the container ship was struck by an unidentified projectile 25 nautical miles northeast of Oman, resulting in damage to some containers.
The secretariat of Iran's Supreme National Security Council issued a statement on the latest developments in negotiations with the U.S., affirming Iran's determination to supervise and control traffic in the Strait of Hormuz until the war completely ends and lasting peace is achieved in the region. On April 18, U.S. officials stated that the U.S. military planned to board and seize oil tankers and merchant ships associated with Iran in international waters within the coming days, expanding its naval strike operations beyond the Middle East. On April 19, the U.S. Central Command announced on social media that a U.S. missile destroyer had intercepted an Iranian cargo ship crossing the North Arabian Sea en route to Iran's Bandar Abbas port, firing its deck guns into the ship's engine room to disable its propulsion. U.S. Marines subsequently boarded and took control of the vessel.
According to a report in the early hours of April 20, a spokesperson for the central headquarters of the Iranian armed forces stated that after the U.S. military attacked an Iranian container ship in the Gulf of Oman on the 19th, the Iranian armed forces launched multiple drones to strike several U.S. warships. Furthermore, the two-week ceasefire agreement previously reached between the U.S. and Iran is set to expire on April 22. Reports surrounding the negotiations are conflicting. U.S. media reported that the U.S. and Iran are expected to jointly announce an extension of the ceasefire on April 22; subsequently, if talks proceed smoothly, President Trump will travel to Islamabad to meet with Iranian President Pezeshkian, and the two may sign an "Islamabad Declaration" aimed at ceasing hostilities. U.S. media had previously reported that an Iranian delegation, including the Speaker of the Iranian Parliament, Mohammad Bagher Ghalibaf, and the Foreign Minister, would arrive in Islamabad on the 21st.
Iranian sources, however, stated that reports of a second round of U.S.-Iran talks in Islamabad were untrue. The sources added that Iran refused to participate in a second round of negotiations with the U.S., citing excessive U.S. demands, unrealistic expectations, a constantly shifting and contradictory stance, and the continued imposition of a maritime blockade and threatening rhetoric deemed violations of the ceasefire, all of which have hindered progress. Under these circumstances, the prospects for a successful outcome from the negotiations remain unclear.
Additionally, Iran stated that, given recent U.S. military movements—including naval deployments, weapons shipments, reconnaissance flights, and air defense preparations—it assessed two potential scenarios and had taken necessary countermeasures. The first scenario is that the U.S. intends to use these military preparations to create psychological pressure to gain leverage at the negotiating table. The second is that the U.S. is fabricating a negotiation narrative to cover and deceive for a surprise attack on some Iranian islands. Reports indicated that Iran believes the likelihood of resumed conflict is higher than continued negotiations and is fully prepared for this possibility.
Following this turbulent weekend, Middle East tensions have reignited after a recent period of cooling. At Monday's market open, Brent crude oil surged by up to 7.9%, nearly erasing most of the previous Friday's losses. Futures for all three major U.S. stock indices declined. Artem Abramov, Deputy Head of Analysis at energy consultancy Rystad Energy, commented, "Any credible signal of the Strait of Hormuz reopening—even temporarily—would have a first-rate impact on the market." However, experts cautioned that even if the U.S. and Iran sign a final, binding peace agreement this week and reopen the strait, it could take weeks or even months for oil markets to normalize. Hundreds of vessels remain stranded in the Persian Gulf, and according to Rystad Energy, oil production in the Middle East has been reduced by approximately 12.4 million barrels per day, with resuming production requiring time.
U.S. stocks shift to 'offensive mode'! A packed earnings week approaches; can investors continue ignoring 'war noise'? In the coming week, investors face a dense lineup of corporate earnings reports. Tesla Motors and Intel are set to report on Wednesday and Thursday, respectively, leading a busy earnings week. Intel's stock price touched its highest level since 2000 during trading on Friday. Earnings from Alaska Air Group and United Airlines Holdings will provide insights into the impact of soaring jet fuel prices. Meanwhile, the performance of GE Vernova will serve as a barometer for demand in artificial intelligence and power generation infrastructure.
For Tesla's upcoming Q1 report, investor focus will be on the latest developments regarding the chip manufacturing ambitions of this company, which operates in both automotive and robotics. CEO Elon Musk stated last Wednesday that Tesla's AI5 chip had been successfully taped out, a chip designed for future electric vehicles, large training clusters, and the Optimus robot. Reports indicate the company is seeking to hire chip engineers in Taiwan—where Taiwan Semiconductor Manufacturing Company produces its chips. Although Tesla has proposed manufacturing its own chips internally at its forthcoming Terafab chip factory, analysts and experts note that building its own wafer fab would present a massive engineering challenge. This raises the question of whether Tesla, ostensibly an electric vehicle company, can convince investors it can become a leader in robotics and AI.
UBS analyst Joseph Spak noted, "Tesla's stock relies more on sentiment, narrative, and momentum trading than on fundamentals." In a recent report, the analyst stated that Tesla still needs to overcome several challenges before its Q1 report, but this does not mean its robotics vision lacks a foundation. Analysts said, "We believe recent concerns over weak EV demand, a Q1 2026 energy business shortfall, rising costs, increased capital expenditure needs, and slow progress on robotaxi and Optimus have weighed on the stock price. However, we still expect progress on robotaxi and Optimus eventually and continue to view Tesla as one of the leaders in physical AI."
The economic data calendar is relatively quiet. Retail sales data on Tuesday and the University of Michigan consumer sentiment index on Friday will be the highlights. These indicators are expected to provide investors with a reading on the state of the consumer—the Middle East war, now in its eighth week, has disrupted the global economy, pushed prices higher, and increased uncertainty. The Michigan sentiment index will be watched particularly closely after its preliminary April reading, released earlier this month, fell to a record low of 47.6.
Although the temporary ceasefire between the U.S. and Iran appeared to hold before its scheduled expiration on Tuesday, the war, which has disrupted global energy flows, shows no clear signs of ending. But U.S. stocks have been indifferent, as evidenced by the S&P 500 and Nasdaq Composite hitting new record highs. Recently, investors have chosen to treat Middle East war headlines as trading noise, instead embracing U.S. stocks, led by tech, as the latest earnings season demonstrates corporate earnings resilience.
The Head of Equity Strategy for the Americas at HSBC stated in a client report last Thursday that the rise in tech stocks is not without basis. Investors anticipate that "despite heightened market uncertainty, the Q1 earnings season will be strong," with optimism toward tech stocks being the highest. The market currently expects the "Magnificent Seven" to post earnings growth of 20%, compared to 12% for the remaining 493 stocks in the S&P 500. Taiwan Semiconductor Manufacturing Company's better-than-expected Q1 results last Thursday—with adjusted EPS up 66% year-over-year and revenue up 40%—provided another strong signal.
The Chief Technical Strategist at LPL Financial pointed out, "The offense is taking the field. Risk appetite has returned, and early cyclical rotation pressures are building beneath the market's surface." That said, the strategist warned that while stock market momentum has broadly recovered, the market needs to see genuine progress on the Iran issue to sustain it. Strategists at Macquarie similarly stated, "Soon... continuing to support the rally will likely require signs of actual concessions from either the U.S. or Iran."
Notably, the large-cap tech engine that drove U.S. stock gains over the past decade has restarted. After falling to its lowest level since July 2025 during the first six weeks of the Middle East war, an ETF tracking the "Magnificent Seven" stocks has rallied 9% over the past five trading sessions, approaching its all-time high. However, Jefferies analyst Michael Toomey believes the tech sector may be nearing the end of this rally. He said, "While most of the 'normalization' move we're seeing is healthy from a fundamental perspective, I think this rally is fully priced (if not overpriced). From a tactical perspective, the market may enter a consolidation phase in the short term."
Corporate earnings resilience is a crucial foundation! Wall Street loudly bullish on U.S. stocks. Despite the Federal Reserve's policy remaining unclear, buoyed by corporate earnings resilience, several Wall Street firms have recently "cheered" for the prospects of U.S. stocks, with the market beginning to anticipate a new bull market led by tech stocks.
Veteran equity strategist and Fundstrat Co-Founder Tom Lee, known as the "Wall Street Soothsayer," believes the U.S. stock market, and global equity markets overall, are in a stronger position now than when they hit their previous all-time highs earlier this year. Tom Lee agrees with a typical assessment from financial giant JPMorgan Chase that the tech sector, centered on AI computing infrastructure, will lead the main theme of the next super bull market phase.
Citigroup upgraded its rating on U.S. stocks from "Neutral" to "Overweight" and expects the S&P 500 to reach 7,700 by year-end. The bank's latest research report indicates that the tech sector, previously suppressed by geopolitical conflict, valuation anxiety, and high expectations, is entering a window shifting from risk appetite repair to fundamental reassessment. After marginal cooling in Middle East tensions, the market quickly switched from safe-haven assets back to risk assets, with the S&P 500 and Nasdaq strengthening simultaneously, suggesting capital has begun trading the "future overall earnings growth trajectory driven by AI" rather than "current panic." Under this framework, tech stocks, especially large-cap tech platforms, are no longer just liquidity-driven crowd favorites but have re-emerged as the core anchor for U.S. stock risk appetite and earnings expectations.
Equity strategists at asset management giant BlackRock have turned "Overweight" on U.S. stocks again. BlackRock emphasized the new U.S. earnings season, asserting that the earnings growth engine can support the main theme of the U.S. bull market. Strategists wrote, "Even during geopolitical conflicts, corporate earnings expectations continue to rise, largely due to robust AI computing demand driven by AI-related investment themes."
In summary, the narrative for a new U.S. bull market is essentially supported by three key pillars: the corporate earnings resilience demonstrated in the latest U.S. earnings season, a renewed risk appetite recovery led by the tech/AI computing theme, and the market's judgment that the Middle East shock will not evolve into a long-term inflation scenario like 2022. As long as these three logical pillars hold, U.S. stocks are poised to continue strengthening against the backdrop of easing Middle East tensions.
However, some institutions warn that the market may currently be underestimating risks. Although investors generally expect the war to gradually de-escalate or choose to selectively ignore the war noise, supply chains, energy infrastructure, and inflation expectations have already suffered tangible impacts that are difficult to fully repair in the short term. Some investment firms point out that the market is treating the situation as if it's over, but underlying vulnerabilities persist.
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