Stocks Slip Before the Open as Oil Rebounds Amid Fragile U.S.-Iran Ceasefire, PCE Inflation and GDP Data in Focus

June S&P 500 E-Mini futures (ESM26) are down -0.31%, and June Nasdaq 100 E-Mini futures (NQM26) are down -0.25% this morning as oil prices advanced amid waning optimism about the U.S.-Iran ceasefire.

Israel’s deadly strikes in Lebanon created an early rift between the two sides, jeopardizing the fragile ceasefire in the Middle East. While Iran has reiterated that its ceasefire with the U.S. should include a halt to the fighting in Lebanon, the U.S. has maintained that Lebanon was not part of the agreement. Iranian Parliament Speaker Mohammad Bagher Ghalibaf said that three provisions of the ceasefire proposal have been violated so far. Meanwhile, Iran continued launching missiles and drones at Arab nations in the Persian Gulf.

The price of WTI crude climbed more than +5% on Thursday as traffic through the Strait of Hormuz remained constrained and after President Trump said the U.S. military would stay near Iran until a “real agreement” is reached and fully honored. “If for any reason it is not, which is highly unlikely, then the ‘Shootin’ Starts,’ bigger, and better, and stronger than anyone has ever seen before,” Mr. Trump said in a social media post late on Wednesday. The first round of direct talks between the U.S. and Iran is scheduled for Saturday morning in Islamabad.

Investors are also awaiting a slew of U.S. economic data, with particular attention on the Fed’s favorite inflation gauge and the final estimate of fourth-quarter GDP.

In yesterday’s trading session, Wall Street’s three main equity benchmarks ended in the green, with the S&P 500, Dow, and Nasdaq 100 notching 4-week highs. Chip and AI-infrastructure stocks rallied amid risk-on sentiment driven by the U.S.-Iran ceasefire deal, with Intel (INTC) jumping over +11% to lead gainers in the Nasdaq 100 and Lam Research (LRCX) rising more than +9%. Also, travel stocks popped amid a slump in oil prices, with Carnival (CCL) surging over +11% and Alaska Air Group (ALK) gaining more than +8%. In addition, Meta Platforms (META) climbed over +6% after the company unveiled its latest AI model, Muse Spark, developed by Meta Superintelligence Labs. On the bearish side, energy stocks sank as oil prices tumbled, with APA Corp. (APA) slumping more than -9% to lead losers in the S&P 500 and Occidental Petroleum (OXY) sliding over -5%.

“This is more of a relief rally than anything sustainable, and we believe that ultimately we will not get anything satisfactory for either side, but taking the temperature down a notch is all that the market desired,” said Joe Gilbert, portfolio manager at Integrity Asset Management.

Meanwhile, minutes of the Federal Open Market Committee’s March 17-18 meeting, released on Wednesday, showed that officials grappled with sharply divergent scenarios for the U.S. economy following the outbreak of the Middle East conflict, along with the policy responses that could follow. Most policymakers were concerned that the prolonged conflict could hurt the labor market and warrant lower interest rates. At the same time, many officials pointed to inflation risks that could ultimately justify rate hikes. “Some participants judged that there was a strong case for a two-sided description of the committee’s future interest-rate decisions in the post-meeting statement, reflecting the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation were to remain at above-target levels,” according to the FOMC minutes. Overall, officials responded to the conflict by voicing concerns about both sides of their mandate.

San Francisco Fed President Mary Daly said on Wednesday that the U.S. economy remains fundamentally in a “good place” despite the uncertainty and volatility stemming from the Middle East conflict. “What we’ve seen is consumers are still spending, businesses are still investing,” Daly said. “There’s a concern that maybe this will push inflation up: that’s our job, we’ll focus on that. And there’s a concern that maybe the labor market isn’t as solid, but we’re not seeing that, we’re seeing it kind of settle at a good place.”

U.S. rate futures have priced in a 99.5% chance of no rate change and a 0.5% chance of a 25 basis point rate hike at this month’s monetary policy meeting.

Today, all eyes are focused on the U.S. core personal consumption expenditures price index, which is set to be released in a couple of hours. The Fed’s preferred inflation gauge will provide a snapshot of price pressures before the Middle East conflict erupted. Economists, on average, forecast that the core PCE price index will stand at +0.4% m/m and +3.0% y/y in February, compared to +0.4% m/m and +3.1% y/y in January.

The U.S. Commerce Department’s final estimate of fourth-quarter gross domestic product will also be closely monitored today. Economists expect the U.S. economy to expand at an annual rate of 0.7% in the fourth quarter, in line with a second estimate.

U.S. Personal Spending and Personal Income data will be released today. Economists project February Personal Spending to rise +0.6% m/m and Personal Income to grow +0.3% m/m, compared to the January figures of +0.4% m/m and +0.4% m/m, respectively.

U.S. Initial Jobless Claims data will come in today. Economists expect this figure to be 210K, compared to last week’s number of 202K.

U.S. Wholesale Inventories data will be released today as well. Economists anticipate that the final February figure will stand at -0.1% m/m.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.29%, down -0.26%.

The Euro Stoxx 50 Index is down -0.93% this morning, giving up some of the strong gains from the previous session as oil prices climbed amid concerns over the durability of the U.S.-Iran ceasefire. Danske Bank said that “optimism around the ceasefire has faded somewhat, with Iran accusing the U.S. of breaching the agreement, weighing on risk sentiment alongside a modest rebound in oil prices.” Industrial, travel, bank, and technology stocks were among the biggest losers on Thursday. At the same time, energy stocks climbed as oil prices rose. Data from the statistics agency Destatis released on Thursday showed that Germany’s monthly industrial production unexpectedly fell in February, with the energy-price shock stemming from the Middle East conflict expected to further weigh on output. “February’s macro data shows that even without the war in the Middle East, the German economy was unfortunately on track for yet another quarter of contraction,” ING’s global head of macro Carsten Brzeski said. Meanwhile, Eurozone government bond yields climbed on Thursday as a renewed rise in oil prices rekindled concerns about energy-driven inflation. Although traders trimmed expectations for European Central Bank rate hikes after Wednesday’s ceasefire announcement, they still expect two quarter-point rate increases by the end of 2026.

Germany’s Exports, Imports, and Industrial Production data were released today.

The German February Exports rose +3.6% m/m, stronger than expectations of +1.0% m/m.

The German February Imports rose +4.7% m/m, stronger than expectations of +4.0% m/m.

The German February Industrial Production unexpectedly fell -0.3% m/m, weaker than expectations of +0.6% m/m.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.72%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.73%.

China’s Shanghai Composite Index closed lower today, tracking declines in regional peers amid doubts over the stability of the U.S.-Iran ceasefire. Israeli strikes in Lebanon and the continued effective closure of the Strait of Hormuz have put the truce between the U.S. and Iran at risk, leaving regional risk sentiment on edge. Consumer and financial stocks led the declines on Thursday. Airline stocks also slid. Bloomberg News reported on Thursday that China is weighing financial relief and other support measures for its state-run airlines after the Middle East conflict drove fuel costs sharply higher. Government subsidies, preferential tax treatment, and state-backed low-interest loans are among the options being considered by authorities, the report said. Meanwhile, data from the China Passenger Car Association showed on Thursday that China’s car sales declined for a sixth consecutive month in March, as higher fuel prices weighed on demand for gasoline models while EV sales continued to suffer from reduced incentives. Investor attention is now squarely on China’s key inflation gauges for March, scheduled for release on Friday. Economists expect China’s consumer inflation to cool slightly, partly as holiday-related effects that boosted February’s reading fade, while producer prices are projected to finally return to positive territory, reflecting the impact of surging energy costs.

Japan’s Nikkei 225 Stock Index closed lower today, retreating after a strong rally in the prior session as optimism surrounding the U.S.-Iran ceasefire waned. The equity drop came as oil prices rebounded after Tehran said several terms of the ceasefire agreement had been violated, with little traffic moving through the Strait of Hormuz. Takamasa Ikeda, senior portfolio manager at GCI Asset Management, said, “Investors have turned calm and started thinking if the peace talks will really work. Oil prices rose again, and that weighed on the equities market.” Real estate and financial stocks led the declines on Thursday. Also weighing on sentiment on Thursday, a government survey showed that confidence among Japan’s households deteriorated in March by the most since the early stages of the COVID pandemic. Meanwhile, Japanese government bonds fell on Thursday amid concerns that higher oil prices will fuel inflation. Japanese Finance Minister Satsuki Katayama said on Thursday that recent market turbulence has highlighted how sharply interest rates can be driven by volatility spilling over from other markets, a dynamic she said has become too significant to ignore. In other news, foreign investors bought a net 2.96 trillion yen ($18.65 billion) worth of Japanese stocks in the week through April 4th, marking a reversal from three consecutive weeks of net selling, according to Ministry of Finance data. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -6.21% to 33.85.

The Japanese March Household Confidence stood at 33.3, weaker than expectations of 38.3.

Pre-Market U.S. Stock Movers

Most chip stocks edged lower in pre-market trading. Micron Technology (MU), Intel (INTC), and Arm Holdings (ARM) were down over -1%.

Applied Digital (APLD) slipped over -3% in pre-market trading after the company posted strong FQ3 results but did not unveil any significant new hyperscaler deals.

Zscaler (ZS) fell more than -3% in pre-market trading after BTIG downgraded the stock to Neutral from Buy and removed it from its first-half Top Picks list.

STAAR Surgical (STAA) jumped more than +23% in pre-market trading after the implantable lens maker reported much stronger-than-expected preliminary Q1 net sales.

Texas Instruments (TXN) rose about +2% in pre-market trading after Stifel upgraded the stock to Buy from Hold with a price target of $250.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - April 9th

WD-40 Company (WDFC), Neogen (NEOG), BlackBerry (BB), The Simply Good Foods Company (SMPL), Versamet Royalties (VMET), Simulations Plus (SLP), Byrna Technologies (BYRN), Northern Technologies International (NTIC).