Stocks Tumble and Crude Prices Jump on Fears of Iran War Escalation

The S&P 500 Index ($SPX) (SPY) today is down -0.63%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.66%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.78%.  June E-mini S&P futures (ESM26) are down -0.60%, and June E-mini Nasdaq futures (NQM26) are down -0.69%.

Stock indexes are slipping today as crude oil prices climbed more than +2% to a 4-week high ahead of tonight’s deadline for Iran to agree to a ceasefire or face escalation of the war.  The markets are watching for any sign of a breakthrough amid a flurry of diplomacy before President Trump’s 8 pm EST deadline tonight.  Mr. Trump insists any deal must ensure uninterrupted transit through the Strait of Hormuz or he will destroy Iran’s bridges and power plants.   The Wall Street Journal reported the US military is making preparations for potential strikes on energy targets in Iran.

Crude oil prices (CLK26) remain volatile, fluctuating between gains and losses amid news headlines about Iran.  Crude is up more than +2% today after Axios reported that the US conducted strikes on military targets on Kharg Island today and Israel told Iranians to refrain from using their country’s railway network. Also, Iran pressed on with attacks across the Persian Gulf, dimming chances for peace. 

Today’s US economic news was supportive for stocks after Feb capital goods new orders nondefense ex-aircraft and parts, a proxy for capital spending, rose +0.6% m/m, stronger than expectations of +0.5% m/m.

Dovish comments today from New York Fed President John Williams were supportive of stocks, as he said the outlook for underlying price pressures in the US was largely unchanged, despite his expectation that higher energy costs stemming from the war in Iran will boost overall inflation.  He added that he anticipated core inflation would rise by just one or two tenths of a percentage point.

The markets are discounting a 3% chance for a +25 bp FOMC rate hike at the April 28-29 policy meeting.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is down -0.249%.  China's Shanghai Composite closed up +0.26%.  Japan's Nikkei Stock 225 closed up +0.03%.

Interest Rates

June 10-year T-notes (ZNM6) today are unchanged.  The 10-year T-note yield is unchanged at 4.331%.  T-notes prices recovered from early losses and are little changed after dovish comments from New York Fed President John Williams, who said the outlook for underlying price pressures in the US was largely unchanged, despite his expectations of higher energy costs stemming from the war in Iran.  Also, safe-haven demand for T-notes has increased ahead of President Trump’s deadline of tonight for Iran to reopen the Strait of Hormuz. 

Today’s rally in WTI crude oil by more than +2% to a 4-week high is boosting inflation expectations and is negative for T-notes.  Also, supply pressures are weighing on T-notes as the Treasury will auction $119 billion of T-notes and T-bonds this week, beginning with today’s $58 billion auction of 3-year T-notes. 

European government bond yields are moving higher today.  The 10-year German bund yield is up +4.6 bp to 3.038%.  The 10-year UK gilt yield is up +4.4 bp to 4.876%.

The Eurozone Apr Sentix investor confidence index fell -16.1 to a 2.5-year low of -19.2, weaker than expectations of -8.0.

The Eurozone Mar S&P composite PMI was revised upward by +0.2 to 50.7 from the previously reported 50.5.

ECB Governing Council member Pierre Wunsch said the ECB might have to increase interest rates several times if the Iran war drags on.

The UK Mar S&P services PMI was revised downward by -0.7 to an 11-month low of 50.5 from the previously reported 51.2.

Swaps are discounting a 58% chance of a +25 bp ECB rate hike at its next policy meeting on April 30.

US Stock Movers

Airline stocks and cruise line operators are falling today, with crude oil prices up more than +2% at a 4-week high, raising fuel costs and cutting into corporate profits.  Carnival (CCL), Norwegian Cruise Line Holdings (NCLH), and Royal Caribbean Cruises Ltd (RCL) are down more than -3%, and United Airlines Holdings (UAL) is down more than -2%.  Also, American Airlines Group (AAL), Southwest Airlines (LUV), Alaska Air Group (ALK), and Delta Air Lines (DAL) are down more than -1%. 

Cryptocurrency-exposed stocks are moving lower today, with Bitcoin (^BTCUSD) down by more than -2%.  Coinbase Global (COIN), MARA Holdings (MARA), and Galaxy Digital Holdings (GLXY) are down more than -2%.  Also, Strategy (MSTR) is down more than -1%, and Riot Platforms (RIOT) is down -0.22%. 

Homebuilders are sliding today after Seaport Global Securities downgraded the sector.  Lennar (LEN), KB Home (KBH), and PulteGroup (PHM) are down more than -2% after being double-downgraded to sell from buy. DR Horton (DHI) and Toll Brothers (TOL) are also down more than -2% after Seaport Global Securities downgraded the stocks to neutral from buy.

Managed care stocks are climbing today after the Centers for Medicare & Medicaid Services finalized a 2.48% rate hike for health insurers in 2027.  UnitedHealth Group (UNH) is up more than +7% to lead gainers in the Dow Jones Industrials, and Humana (HUM) and CVS Health (CVS) are up more than +5%. Also, Elevance Health (ELV) is up more than +3%, Centene (CNC) is up more than +2%, and Molina Healthcare (MOH) is up +0.35%.

ARM Holdings Plc (ARM) is down more than -4% to lead losers in the Nasdaq 100 after Morgan Stanley downgraded the stock to equal weight from overweight.

Apple (AAPL) is down more than -3% to lead losers in the Dow Jones industrials after Nikkei Asia reported the company is seeing setbacks in the engineering test phase of its foldable iPhone that could push back its production and shipment schedule. 

Tractor Supply Co (TSCO) is down more than -3% after Bank of America Global Research downgraded the stock to neutral from buy. 

First Interstate BancSystem (FIBK) is down more than -2% after UBS downgraded the stock to sell from neutral with a price target of $30.

ASML Holding NV (ASML) is down by more than 1% after US lawmakers unveiled legislation aimed at tightening restrictions on chip-tool exports to China.

Phillips 66 (PSX) is down more than -1% after saying its Q1 results were impacted by about $900 million in pre-tax mark-to-market losses due to increases in commodity prices impacting its short positions.

Paramount Skydance (PSKY) is up more than +12% to lead gainers in the S&P 500, and it entered into equity syndication agreements with a vehicle of the Abu Dhabi sovereign wealth fund L’imad Holding to support its acquisition of Warner Bros. Discovery. 

FuboTV (FUBO) is up more than +5% after Barrington Research upgraded the stock to outperform from market perform with a price target of $16. 

CF Industries Holdings (CF) is up more than +4% after RBC Capital Markets boosted its price target on the stock to $125 from $100.

Broadcom (AVGO) is up more than +3% to lead gainers in the Nasdaq 100 after announcing a long-term agreement with Google to develop and supply Tensor Processing Units and confirming plans to power some of Anthropic’s operations.

Earnings Reports(4/7/2026)

Aehr Test Systems (AEHR), Ames National Corp (ATLO), Greenbrier Cos Inc/The (GBX), Kura Sushi USA Inc (KRUS), OP Bancorp (OPBK), Phoenix Education Partners Inc (PXED), Skillsoft Corp (SKIL).