Stocks Set to Open Lower as Oil Prices Top $100 After U.S.-Iran Talks Collapse, Big Bank Earnings Awaited

June S&P 500 E-Mini futures (ESM26) are down -0.62%, and June Nasdaq 100 E-Mini futures (NQM26) are down -0.64% this morning, pointing to a lower open on Wall Street as oil prices jumped back above $100 a barrel after President Trump ordered a blockade of the Strait of Hormuz following the weekend’s collapse of U.S.-Iran peace talks.

The U.S. and Iran ended direct talks held over the weekend in Pakistan without a deal. Vice President JD Vance, who led the American delegation, said he’s returning home without a deal after Iran refused to agree not to pursue a nuclear weapon. “We’ve made very clear what our red lines are, what things we’re willing to accommodate them on, and what things we’re not willing to accommodate them on,” Vance told reporters early Sunday. “And we’ve made that as clear as we possibly could, and they have chosen not to accept our terms.”

President Trump said on Sunday that the U.S. would blockade the Strait of Hormuz following the failure of peace negotiations with Iran. “Effective immediately, the United States Navy, the Finest in the World, will begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz,” Trump said in a social media post. The blockade would effectively cut off Iran’s main channel for exporting oil. U.S. Central Command forces said they will enforce a blockade on all maritime traffic entering and leaving Iranian ports starting at 10 a.m. ET on Monday. Meanwhile, The Wall Street Journal reported that Mr. Trump and his advisers are weighing the resumption of limited military strikes in Iran. The price of WTI crude jumped more than +8% on Monday, intensifying concerns about a prolonged energy shock.

Aside from monitoring Iran-related headlines, investors are awaiting a new round of U.S. economic data, comments from Federal Reserve officials, and the start of the first-quarter earnings season this week.

In Friday’s trading session, Wall Street’s major equity averages ended mixed. Software stocks sank on renewed AI disruption fears, with ServiceNow (NOW) slumping over -7% and Cadence Design Systems (CDNS) sliding more than -5%. Also, cybersecurity stocks tumbled, with Cloudflare (NET) plunging over -13% and Okta (OKTA) dropping more than -7%. In addition, Fair Isaac (FICO) cratered about -14% and was among the top percentage losers on the S&P 500 amid investor concerns that the Trump administration is set to increase competition among credit bureaus. On the bullish side, chip stocks advanced, with Marvell Technology (MRVL) climbing over +7% to lead gainers in the Nasdaq 100 and Broadcom (AVGO) rising more than +4%.

The U.S. Bureau of Labor Statistics report released on Friday showed that consumer prices rose +0.9% m/m in March, weaker than expectations of +1.0% m/m. On an annual basis, headline inflation rose +3.3% in March, the biggest increase in two years, but slightly weaker than expectations of +3.4%. Also, the core CPI, which excludes volatile food and fuel prices, rose +0.2% m/m and +2.6% y/y in March, weaker than expectations of +0.3% m/m and +2.7% y/y. In addition, the University of Michigan’s preliminary U.S. consumer sentiment index fell to a record low of 47.6 in April, weaker than expectations of 51.6.

“There are no signs, yet, that high energy prices are seeping into core inflation. That could be a process that plays out over time as companies absorb the brunt of the blow, at least initially,” said Brian Jacobsen at Annex Wealth Management.

First-quarter corporate earnings season kicks off on Monday. Goldman Sachs (GS) is scheduled to report earnings today, followed by JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) on Tuesday. Bank of America (BAC) and Morgan Stanley (MS) will report results on Wednesday. The six largest Wall Street banks are expected to deliver solid Q1 results after deregulation took effect and weeks of market volatility boosted trading activity. However, investor focus will squarely be on executives’ remarks regarding the outlook for private credit, interest rates, and dealmaking activity, as well as the impact of the Middle East conflict on economic growth and inflation. Netflix (NFLX), Johnson & Johnson (JNJ), PepsiCo (PEP), BlackRock (BLK), Abbott Laboratories (ABT), The Progressive Corporation (PGR), and Truist Financial (TFC) are among other major names scheduled to deliver quarterly updates during the week. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +12.5% increase in quarterly earnings for Q1 compared to the previous year, marking the sixth consecutive quarter of double-digit growth.

“Earnings are the market’s chance to shift the conversation away from geopolitics and refocus on the fundamentals. The risk is that earnings don’t really provide that reassurance,” said Bret Kenwell at eToro. 

Market participants will also keep an eye on U.S. economic data this week for any clues on the interest-rate outlook. The U.S. Producer Price Index for March will be the main highlight. Similar to the CPI report, the wholesale inflation measure will reflect the jump in energy prices during the first month of the Middle East conflict. Economists project the PPI to surge +1.2% in March from the prior month, marking the largest increase in four years. Still, Commerzbank economists said they expect the Fed to “look past the rise in inflation” for now and keep key interest rates unchanged in the coming months, adding that the rate outlook will hinge on how long the energy-price shock lasts. U.S. rate futures have priced in a 97.4% probability of no rate change at the conclusion of the Fed’s April meeting, with a 16.5% chance of a rate cut by the end of 2026. Other noteworthy data releases include the U.S. Empire State Manufacturing Index, the Import Price Index, the Export Price Index, the Philly Fed Manufacturing Index, Initial Jobless Claims, Industrial Production, and Manufacturing Production.

In addition, investors will hear perspectives from a slew of Fed officials, including Miran, Goolsbee, Barr, Barkin, Collins, Paulson, Bowman, Williams, Daly, and Waller, throughout the week. The Fed will also release its Beige Book survey of regional business contacts this week, providing anecdotal insight into economic conditions across the country. The Beige Book is published two weeks before each meeting of the policy-setting Federal Open Market Committee.

Meanwhile, the International Monetary Fund is set to hold meetings this week in Washington, during which it will release new economic forecasts and its assessment of the consequences of the Middle East conflict.

Today, investors will focus on the National Association of Realtors’ existing home sales data, set to be released in a couple of hours. Economists foresee this figure coming in at 4.07 million in March, compared to 4.09 million in February.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.34%, down -0.02%.

The Euro Stoxx 50 Index is down -1.17% this morning as hopes for a quick end to the Middle East conflict diminished after U.S.-Iran peace talks collapsed and Washington moved to impose a blockade around the Strait of Hormuz. Travel stocks led the declines on Monday. Bank and industrial stocks also slumped. At the same time, energy stocks climbed amid a surge in oil prices. Eurozone government bond yields climbed toward recent highs on Monday as rising oil prices stoked inflation concerns and bolstered expectations of European Central Bank rate hikes. Traders are currently pricing in almost three 25-basis-point ECB rate hikes by the end of the year. Investors were also assessing political developments in Hungary, where Peter Magyar won the election and is poised to become the next prime minister, bringing an end to Viktor Orban’s 16-year tenure. Investor focus this week is on the final Eurozone inflation data for March and industrial production figures for February, along with the start of the earnings season. Also, the ECB will release the accounts of its March policy meeting this week. Investors will be looking to see whether the report reveals any tilt toward rate hikes. In addition, a host of ECB officials are in Washington, D.C., for the IMF meetings, with President Christine Lagarde, Chief Economist Philip Lane, and Executive Board member Isabel Schnabel all scheduled to speak this week.

The European economic data slate is empty on Monday.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +0.06%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.74%.

China’s Shanghai Composite Index reversed earlier losses and closed slightly higher today, continuing its trend of outperforming global peers during the Middle East conflict. New energy stocks climbed on Monday. Also, shares of rare earth companies rose after key producers said their Q2 product prices were significantly higher, reflecting a widening gap between global supply and demand for rare earth metals. In addition, AI-related stocks gained on optimism that TSMC is poised to post its fourth consecutive quarter of record profit, driven by insatiable AI demand. Chinese equities have emerged as a relative safe haven since the Middle East conflict began, supported by the country’s energy resilience, policy support, and limited exposure to the conflict. BNP Paribas analyst William Bratton said on Monday that China’s market outperformance could continue if the conflict drags on. “China looks relatively attractive given the domestically orientated nature of its economy and equity markets, as well as valuations and risks to current earnings expectations,” the analyst said. Investor attention this week is on a flurry of China’s economic data, following earlier releases that signaled encouraging progress on reflation. The main batch of indicators begins with trade data for March on Tuesday. Then, the focus will shift to China’s first-quarter GDP data on Thursday, which will reveal how the economy performed during what has been a turbulent year so far. The nation’s retail sales, industrial production, and property investment data for March, due the same day, will indicate the degree of momentum heading into the second quarter.

Japan’s Nikkei 225 Stock Index closed lower today as the collapse of U.S.-Iran peace talks over the weekend reignited investor concerns about a potential escalation in the Middle East conflict. U.S. President Donald Trump ordered a blockade of the Strait of Hormuz and is reportedly weighing the resumption of limited military strikes in Iran. The news triggered a surge in oil prices, reviving concerns about higher inflation in Japan, which relies on the Middle East for more than 90% of its crude imports. Utility, automobile, and electronics stocks underperformed on Monday. Meanwhile, Japan’s 10-year government bond yield rose to its highest level since 1997 on Monday amid concerns that higher energy prices will accelerate inflation. As investors sought refuge in the safe-haven dollar, the yen weakened further, compounding inflation risks by driving up import costs. Bank of Japan Governor Kazuo Ueda, in a speech on Monday delivered by Deputy Governor Ryozo Himino, again warned that Japan could face upward pressure on prices more easily than in the past, suggesting that an interest-rate hike remains on the table. While higher crude oil prices sparked by the Middle East conflict are expected to lift energy costs in the short term, they could exert both upward and downward pressure on underlying inflation, Ueda said. Investors will also hear from Governor Ueda later this week, when he is set to hold a press briefing in Washington following the IMF and G20 meetings. In corporate news, Toto Ltd. slumped over -7% after Bloomberg reported that the toilet maker had suspended new orders for its prefabricated bathrooms due to a material shortage. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -1.78% to 32.03.

Pre-Market U.S. Stock Movers

The Magnificent Seven stocks fell in pre-market trading as risk appetite weakened after U.S.-Iran peace talks failed, with Meta Platforms (META) and Amazon.com (AMZN) dropping over -1%.

Most chip stocks retreated in pre-market trading, with Micron Technology (MU) falling about -2% and Advanced Micro Devices (AMD) sliding over -1%.

Travel stocks slid in pre-market trading amid a surge in oil prices. Carnival (CCL) was down more than -4%. Also, Norwegian Cruise Line Holdings (NCLH) and Alaska Air Group (ALK) were down over -2%.

ON Semiconductor (ON) climbed over +3% in pre-market trading after BofA upgraded the stock to Buy from Neutral with a price target of $85.

Sandisk (SNDK) rose more than +1% in pre-market trading after Nasdaq said on Friday that the company would join the Nasdaq 100 Index on April 20th, replacing software firm Atlassian.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Monday - April 13th

The Goldman Sachs Group (GS), Fastenal Company (FAST), FB Financial (FBK), WaFd, Inc. (WAFD), Platinum Group Metals (PLG), Mayfair Gold (MINE).