By Martin Baccardax
U.S. stocks looked poised for gains Tuesday as investors looked past the latest round of headlines tied to the war with Iran, a worrying rise in oil prices, and Treasury yields that suggested mounting inflation concerns. The tech sector continues to drive markets higher despite escalating tensions in the Gulf.
Stocks retreated modestly on Monday, with the S&P 500 giving back around 0.4% and the Nasdaq Composite slipping 0.2% by the close of trading amid a surge in global crude prices and reports of tit-for-tat attacks in the Gulf that gnawed around the edges of the fragile truce that's been in place for much of the past month.
Shipping traffic in the Strait of Hormuz, the world's most important energy conduit, effectively has been stalled since the U.S. attacks began on Feb. 27, resulting in a surge in global crude prices and the re-stoking of inflation metrics in major economies around the world.
Stocks, however, have powered notably higher since the end of March, with an index of the so-called Magnificent Seven tech giants surging more than 21% and lifting both the S&P 500 and the Nasdaq to a series of fresh record highs.
"Tech exuberance continues to trump oil prices," said Thomas Mathews, head of markets for the Asia Pacific region at Capital Economics.
"Broadly speaking, we're optimistic about demand for AI technology, but it would probably be too far to think these companies are immune to the war," he added. "Our sense remains that in a very adverse shock, tech stocks would still come under pressure."
That's not where markets are today, however, and even with tensions rising in the Gulf, and investors wary of headline risks linked to the conflict, tech looks set to lift markets gains on Tuesday. The tech-heavy Nasdaq was poised for a fresh all-time peak ahead of a key set of earnings from chip maker Advanced Micro Devices after the close of trading.
Still, the first of several labor market indicators expected over the next four days is due Tuesday. The Job Openings and Labor Turnover Survey for March could be the first indication of weakness tied to the war with Iran.
"Importantly, the ratio of openings to unemployed workers fell to 1.02 in February, barely above 1:1," said Anthony Saglimbene, chief market strategist at Ameriprise. "A move below that level would mark the first time since the pandemic recovery that job seekers outnumber available positions."
That reading, in fact, could sharpen investor focus on the impacts of the war, particularly with respect to inflation concerns, and chip away at the early gains forecast for Wall Street.
Brent crude contracts for July delivery, the new global benchmark, slipped 1.3% in overnight trading to $112.78 a barrel, but remain some 11% higher than at the start of last week.
"Markets may find some relief today following President Donald Trump's overnight comments suggesting the conflict could continue for another two to three weeks," said ING's head of commodities strategy, Warren Patterson. "However, markets are likely to view this with considerable skepticism, given the recent escalation and the repeated extensions of projected timelines for ending hostilities since the conflict began."
That, alongside last week's elevated readings for March PCE inflation, was helping push Treasury bond yields sharply higher, with 30-year paper holding north of 5% for the first time since the summer of 2025 and 10-year notes topping 4.43% early Tuesday.
A test of the 4.5% for 10-year notes, which was breached only briefly last spring, could provide a new set of challenges for U.S. stocks, especially with the S&P 500's dividend yield hitting an all-time low of 1.08% this week.
"If tensions continue or escalate further, the market may need to price in a higher risk premium across oil prices, bond yields, and expectations for Federal Reserve policy," said Linh Tran, market analyst at trading platform XS.com.
"Although the S&P 500 has not lost its broader uptrend, the market is starting to become more cautious as it moves into the later stage of earnings season," she added.
Write to Martin Baccardax at martin.baccardax@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 05, 2026 06:35 ET (10:35 GMT)
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