Wall Street’s major averages ended the week with the S&P 500 and the Nasdaq hitting new highs as the conflict in the Middle East continued while oil prices rose. On Tuesday, Trump said the U.S. would extend its ceasefire with Iran until a coordinated plan for an end to the war, which would include Israel, was brought forward.
Iran’s response was to seize two container ships in the Strait on Wednesday. Six ships total passed through, three of them oil tankers. The same thin traffic as Tuesday. The ceasefire changed the diplomatic posture. It did not add a single barrel to supply. Later, Trump ordered the U.S. Navy to “shoot and kill” any vessel found placing mines in the Strait of Hormuz with “no hesitation.”
Earnings season on Wall Street has been decided mixed. Software companies are hurting on the prospect of AI taking over. ServiceNow and IBM got sold on their earnings call. Semiconductor stocks are doing well – Intel smashed earnings and surged after hours. Texas Instruments had its best day in 26 years.
For the week, the S&P gained 0.6%, while the Nasdaq rose 1.5% and the Dow declined 0.4%.
Future Wealth’s View
More than six weeks have passed since the Iran war began, and the impact of the conflict on businesses is becoming more evident. The impacts of surging oil prices, supply chain issues, and lower demand from the Middle East are starting to show up in Q1 earnings. Consumer sentiment hit the lowest reading in survey history.
Markets continue to ignore the Strait of Hormuz being closed. Ship owners and insurers will need more than a simple announcement of a peace deal to venture through the strait as they did before the war. Even when the war ends, it is projected that it will take six to eight weeks just to reposition the world’s tanker network to bring crude oil prices back to $60 levels.
In the past week alone the Trump has: — vulgar tweeted Iran for closure of Hormuz; threatened Iran; blamed China; praised China; celebrated the strait being opened; declared the blockade a success; confirmed peace talks; promised a deal with Iran; stated bombs will fall on Iran; called off the strikes and survived another assasination attempt yesterday.
Trump has lost all credibility with Iran and with leaders of every other country and it increasingly appears that the only way out of the Iran war is to walk away, claim victory that no one will dare to question and let Iran open the Strait of Hormuz to get back to business as usual.
The markets are rallying for the war to end soon. The war may not be over but it appears Trump is over with the war.