Stocks Rally on a Push for Diplomacy to End US-Iran War

The S&P 500 Index ($SPX) (SPY) on Tuesday closed up +1.18%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.66%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.81%.  June E-mini S&P futures (ESM26) rose +1.18%, and June E-mini Nasdaq futures (NQM26) rose +1.76%.

Stock indexes rallied sharply on Tuesday, with the S&P 500 posting a 2-month high, the Dow Jones Industrial Average a 1.25-month high, and the Nasdaq 100 a 2.25-month high.  Optimism that the US and Iran will extend the two-week ceasefire knocked crude oil prices sharply lower on Tuesday and pushed stocks higher.  The US and Iran are in discussions on holding additional negotiations to extend a two-week ceasefire that expires on April 22.  The New York Post reported that President Trump said talks could resume "over the next two days" in Pakistan.   There are also reports that Iran might pause shipments through the Strait of Hormuz to avoid sparking an incident with the US military.  The news knocked crude oil prices down by more than -7%.

The US military began a naval blockade of the Strait of Hormuz on Monday, and President Trump threatened to retaliate in the event of Iranian resistance.  Iran said it would target all ports in and close to the Persian Gulf if its own shipping hubs are threatened.

The stock market also saw support after Tuesday’s US March PPI report of +0.5% m/m and +4.0% y/y, which was weaker than market expectations of +1.1% m/m and +4.6% y/y.  The March core PPI report of +0.1% m/m and +3.8% y/y was weaker than market expectations of +0.4% m/m and +4.1% y/y.  The report suggested that higher fuel prices are only slowly filtering into US inflation statistics.

A positive factor for the stock market is that the Senate Banking Committee will hold a hearing next week on Kevin Warsh as the new Fed Chair. South Carolina Senator Tim Scott said he is optimistic that the Trump administration will soon drop its investigation into Fed Chair Powell, allowing Senator Thom Tillis to vote in favor of approving Kevin Warsh as the new Fed Chair and moving his nomination out of the Senate Banking Committee and to the full Senate for a vote.  Mr. Tillis has said he will not vote in favor of Mr. Warsh until the Trump administration drops its threat to prosecute Fed Chair Powell for cost overruns on the Fed building.

WTI crude oil prices (CLK26) tumbled by more than -7% Tuesday on hopes that the US and Iran will resume negotiations to end the war.  On Monday, the US vowed to blockade all vessels passing through the Strait of Hormuz that call at Iranian ports or were headed there.  The blockade could exacerbate global oil and fuel shortages, as about a fifth of the world’s oil and liquefied natural gas transits through the strait.  Iran has been able to export crude oil during the war, exporting about 1.7 million bpd in March.

Earnings season begins this week as money center banks report, with Q1 S&P 500 earnings projected to climb +12% y/y, according to Bloomberg Intelligence.  Stripping out the technology sector, Q1 earnings are projected to increase around 3%, the weakest in two years.

The markets are discounting a 1% chance for a +25 bp FOMC rate hike at the April 28-29 policy meeting.

Overseas stock markets settled higher on Tuesday.  The Euro Stoxx 50 rose to a 6-week high and closed up by +1.35%.  China's Shanghai Composite climbed to a 3.5-week high and closed up +0.95%.  Japan's Nikkei Stock 225 rallied to a 6-week high and closed up +2.43%.

Interest Rates

June 10-year T-notes (ZNM6) on Tuesday closed up by +9.5 ticks.  The 10-year T-note yield fell -4.1 bp at 4.252%.  T-note prices moved higher on Tuesday from a favorable PPI report.  Also, Tuesday’s 7% plunge in WTI crude oil prices knocked inflation expectations lower, a bullish factor for T-notes.  Gains in T-notes were limited as stocks rallied sharply on Tuesday in hopes of an end to the US-Iran war. 

European government bond yields moved lower on Tuesday.  The 10-year German bund yield fell -6.9 bp to 3.024%.  The 10-year UK gilt yield fell -8.8 bp to 4.781%.

ECB President Christine Lagarde said the Eurozone economy is “between the baseline and the adverse” projections in the ECB’s base case, reflecting the war in Iran.

ECB Governing Council member Olli Rehn said faster inflation due to the Iran war doesn't make an interest rate hike "self-evident."

Swaps are discounting a 28% chance of a +25 bp ECB rate hike at its next policy meeting on April 30.

US Stock Movers

Most of the Magnificent Seven technology stocks rallied sharply on Tuesday, lifting the broader market.  Meta Platforms (META) closed up more than +4%, and Tesla (TSLA), Amazon.com (AMZN), Nvidia (NVDA), and Alphabet (GOOGL) closed up more than +3%.  Also, Microsoft (MSFT) closed up more than +2%, and Apple (AAPL) was the lone decliner, closing down -0.16%.

Airline stocks rallied on Tuesday after crude oil prices fell by more than 7%, which lowers jet fuel costs and boosts profitability. Also, American Airlines Group (AAL) closed up more than +8% after United Airlines Holdings CEO Kirby floated a possible combination with the company.  Delta Air Lines (DAL) and Alaska Air Group (ALK) closed up more than +7%, and Southwest Airlines (LUV) closed up more than +4%.  In addition, United Airlines Holdings (UAL) closed up more than +2%.

Cryptocurrency-exposed stocks moved higher on Tuesday as Bitcoin (^BTCUSD) rose more than +1% to a 1-month high.  Coinbase Global (COIN) and Galaxy Digital Holdings (GLXY) closed up more than +5%, and Riot Platforms (RIOT) closed up more than +4%.  Also, Strategy (MSTR) closed up more than +3%, and MARA Holdings (MARA) closed up more than +1%. 

Energy producers and service providers retreated on Tuesday as WTI crude oil fell more than -7%.  Apa Corp (APA) closed down more than -6%, and Devon Energy (DVN) and Occidental Petroleum (OXY) closed down more than -4%.  Also, ConocoPhillips (COP) closed down more than -3%, and Exxon Mobil (XOM), Halliburton (HAL), and Valero Energy (VLO) closed down more than -2%.  In addition, Chevron (CVX) closed down more than -2% to lead losers in the Dow Jones Industrials. 

Travere Therapeutics (TVTX) closed up more than +36% after the US FDA approved the company’s Filspari medication to reduce proteinuria in patients 8 years and older with focal segmental glomerulosclerosis without nephrotic syndrome. 

Bloom Energy (BE) closed up more than +23% after expanding its partnership with Oracle to support the buildout of AI and cloud computing infrastructure.

Globalstar (GSAT) closed up more than +9% on reports that Amazon.com is in advanced talks to acquire the company. 

CoreWeave (CRWV) closed up more than +6% after Bernstein raised its price target on the stock to $67 from $56. 

TransDigm Group (TDG) closed up more than +5% after reporting preliminary Q2 net sales of $2.54 billion to $2.55 billion, above the consensus of $2.42 billion.

Citigroup (C) closed up more than +2% after reporting Q1 investment banking revenue of $1.33 billion, better than the consensus of $1.25 billion.

CarMax (KMX) closed down more than -15% after reporting a Q1 loss per share of -85 cents versus a profit of +58 cents in the year-ago period. 

Wells Fargo & Co (WFC) closed down more than -5% after reporting Q1 net interest income of $12.10 billion, below the consensus of $12.27 billion. 

Dell Technologies (DELL) closed down more than -3%, and HP Inc. (HPQ) closed down more than -1% after Nvidia denied a report that it was seeking to acquire one or both of the companies. 

Earnings Reports(4/15/2026)

Bank of America Corp (BAC), First Horizon Corp (FHN), JB Hunt Transport Services Inc (JBHT), M&T Bank Corp (MTB), Morgan Stanley (MS), PNC Financial Services Group Inc (PNC), Progressive Corp/The (PGR).