Stocks Settle Lower on Doubts Over a Middle East Peace Deal

The S&P 500 Index ($SPX) (SPY) on Monday closed down -0.24%, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -0.01%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.31%.  June E-mini S&P futures (ESM26) fell -0.22%, and June E-mini Nasdaq futures (NQM26) fell -0.31%.

Stock indexes settled lower on Monday as crude oil prices soared due to doubts about the prospects for peace talks to end the Iran war.  Iran on Saturday said the Strait of Hormuz was closed for shipping following a refusal by the US to lift a naval blockade of Iran's vessels.  The UK reported Saturday that a tanker was approached by Iranian gunboats off the coast of Oman before being fired at, and an unknown projectile hit a container ship in a separate incident.  India also said some of its ships were fired upon.  A US-Iran ceasefire is due to expire on Wednesday, and it’s unclear whether that truce will be extended, or whether talks between US and Iranian officials will go ahead this week.  President Trump said it's "highly unlikely" he will extend the ceasefire with Iran after Wednesday’s deadline. 

Stocks recovered from their worst level after the New York Post reported that Vice President Vance is on his way to Pakistan for talks with Iran, and that President Trump is open to meeting with Iranian leaders.  Strength in software stocks on Monday was also a positive factor for the broader market.

WTI crude oil prices (CLK26) rallied more than +6% on Monday after the US Navy over the weekend fired upon and boarded an Iranian-flagged cargo ship in the Gulf of Oman, the first seizure in the US blockade of the Strait of Hormuz.  The Wall Street Journal reported that the US military is preparing to board Iran-linked oil tankers and seize commercial ships in international waters in the coming days to pressure Iran into reopening the Strait of Hormuz.  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 recently been able to export crude oil during the war, with exports of about 1.7 million bpd in March.

Earnings season continues this week.  So far, 81% of the 48 S&P 500 companies that reported Q1 earnings have beaten estimates.  Q1 S&P 500 earnings are 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 mixed on Monday.  The Euro Stoxx 50 closed down -1.24%.  China's Shanghai Composite climbed to a 1-month high and closed up +0.76%.  Japan's Nikkei Stock 225 closed up +0.60%.

Interest Rates

June 10-year T-notes (ZNM6) on Monday closed down by -2 ticks.  The 10-year T-note yield rose +0.3 bp to 4.2510%.  June T-notes were under pressure on Monday from rising oil prices.  WTI crude rose more than +6% on Monday, boosting inflation expectations, a bearish factor for T-notes. 

T-notes recovered from their worst level on signs that Fed Chair nominee Kevin Warsh will support an independent Fed and prioritize low inflation after Politico reported that Fed Chair nominee Warsh's prepared statement before the Senate Banking Committee on Tuesday will say that his is committed to ensuring that the conduct of monetary policy remains "strictly independent" and he is committed to keeping inflation in check, saying price stability is a mandate for the Fed "without excuse or equivocation."  

European government bond yields moved higher on Monday.  The 10-year German bund yield rose +2.0 bp to 2.980%.  The 10-year UK gilt yield rose +7.2 bp to 4.834%.

German Mar PPI rose +2.5% m/m, stronger than expectations of +1.4% m/m and the largest monthly increase in 3.5 years.

Swaps are discounting a 10% 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 retreated on Monday after WTI crude prices rose by more than +6%, which boosts fuel costs and weighs on company profits.  American Airlines Group (AAL) and Alaska Air Group (ALK) closed down more than -4%, and Norwegian Cruise Line Holdings (NCLH) closed down more than -3%.  Also, United Airlines Holdings (UAL) and Southwest Airlines (LUV) closed down more than -2%, and Royal Caribbean Cruises Ltd (RCL) closed down more than -1%.

Chipmakers and AI-infrastructure stocks were under pressure on Monday, a negative factor for the broader market.  Intel (INTC) closed down more than -4% to lead losers in the Nasdaq 100.  Also, Micron Technology (MU), Advanced Micro Devices (AMD), Broadcom (AVGO), Seagate Technology Holdings Plc (STX), and Lam Research (LRCX) closed down more than -1%. 

Software stocks moved higher on Monday, helping limit losses in the broader market.  Atlassian (TEAM) closed up more than +7%, and ServiceNow (NOW) and Workday (WDAY) closed up more than +3%.  Also, Salesforce (CRM) closed up more than +2% to lead gainers in the Dow Jones Industrials.  In addition, Intuit (INTU), Datadog (DDOG), and Cadence Design Systems  (CDNS) closed up more than +2%, and Adobe Systems (ADBE) and Oracle (ORCL) closed up more than +1%.

AST SpaceMobile (ASTS) closed down more than -5% after the company’s New Glenn rocket failed to correctly place a satellite into its planned orbit. 

Hess Midstream LP (HESM) closed down more than -2% after Goldman Sachs downgraded the stock to sell from neutral with a price target of $32.

TopBuild Corp. (BLD) closed up more than +19% after QXO Inc. said it is acquiring the company for $17 billion, or $505 per share. 

Marvell Technology (MRVL) closed up more than +5% to lead gainers in the Nasdaq 100 after “The Information” reported that Google is in discussions with the company to develop two new chips to run AI models more efficiently. 

Stanley Black & Decker (SWK) closed up more than +5% after saying it does not expect the recent changes to the Section 232 tariff rules to have a material impact on its full-year guidance.

Okta Inc (OKTA) closed up more than +4% after Barclays upgraded the stock to overweight from equal weight with a price target of $90.

Air Products and Chemicals (APD) closed up more than +1% after Berenberg upgraded the stock to buy from hold with a price target of $350. 

Earnings Reports(4/21/2026)

3M Co (MMM), Capital One Financial Corp (COF), Chubb Ltd (CB), Danaher Corp (DHR), DR Horton Inc (DHI), EQT Corp (EQT), Equifax Inc (EFX), General Electric Co (GE), Genuine Parts Co (GPC), Halliburton Co (HAL), Interactive Brokers Group Inc (IBKR), Intuitive Surgical Inc (ISRG), MSCI Inc (MSCI), Northern Trust Corp (NTRS), Northrop Grumman Corp (NOC), Quest Diagnostics Inc (DGX), RTX Corp (RTX), Synchrony Financial (SYF), Tractor Supply Co (TSCO), United Airlines Holdings Inc (UAL), UnitedHealth Group Inc (UNH), W R Berkley Corp (WRB).