Stocks Rally on US Peace Plan to End Iran War

The S&P 500 Index ($SPX) (SPY) today is up +0.62%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.67%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.75%.  June E-mini S&P futures (ESM26) are up +0.61%, and June E-mini Nasdaq futures (NQM26) are up +0.74%.

Stocks jumped, crude oil prices plunged, and bond yields fell today after the Trump administration stepped up efforts to end the war with Iran. The US sent a 15-point peace proposal to Iran, delivered by Pakistan, that covers a rollback of Iran’s nuclear program, including the resumption of monitoring by the International Atomic Energy Agency, limits on missiles, and access for shipping through the Strait of Hormuz.  In return, Iran would get relief from economic sanctions.  WTI crude oil tumbled more than -4% on the news, and the 10-year T-note yield is down -3 bp to 4.33%.

However, stock index futures fell from their best levels, and crude oil prices rebounded from their lows today after Iran’s semi-official news agency Fars said Iran rejects the US ceasefire proposal and said a truce and peace talks are not viable in current conditions.

Despite the US peace proposal, Iran has kept up missile and drone attacks today on Israel and the Arab Gulf states.  Saudi Arabia intercepted a drone in the east of the country, while a strike targeting Kuwait set ablaze a fuel tank at its main airport.  There are concerns that the Iran war could escalate throughout the Middle East.  Saudi Arabia agreed to give the US military access to King Fahd Air Base, and the UAE closed an Iranian-owned hospital and club.  Iran’s Middle Eastern neighbors are growing frustrated with Iran, which has responded to US and Israeli attacks by hitting targets in several nearby nations.  

US MBA mortgage applications fell -10.5% in the week ended March 20, with the mortgage purchase sub-index down -5.4% and the refinancing mortgage sub-index down -14.6%.  The average 30-year fixed rate mortgage rose +13 bp to 6.43% from 6.30% the prior week.

The US Feb import index ex-petroleum rose +1.2% m/m, stronger than expectations of +0.4% m/m and the biggest increase in 4 years.

Crude oil prices (CLK26) remain high despite attempts to boost global supplies.  The IEA on March 11 released 400 million barrels from emergency oil stockpiles and said the war against Iran is disrupting 7.5% of global oil supply, and the conflict will cut global oil supply by 8 million bpd this month.  The closure of the Strait of Hormuz, through which about a fifth of the world’s oil and natural gas flows, has choked off oil and gas flows due to Iran’s attacks on shipping in the waterway and forced Gulf producers to cut output because they can’t export from the region.  Iran is also seeking to control ship transit through the Strait of Hormuz, asking vessels to provide lists of crew and cargo, along with voyage details and bills of lading if they want to travel through the waterway.  Goldman Sachs warns that crude prices could exceed the 2008 record high of close to $150 a barrel if flows through the Strait of Hormuz remain depressed through March.

The International Energy Agency said Monday that more than 40 energy sites across nine countries in the Middle East have been "severely or very severely" damaged, potentially prolonging disruptions to global supply chains once the war in Iran ends. 

The markets are discounting a 4% chance for a +25 bp FOMC rate hike at the April 28-29 policy meeting.

Overseas stock markets are higher today.  The Euro Stoxx 50 is up +1.30%.  China's Shanghai Composite closed up +1.30%.  Japan's Nikkei Stock 225 closed up +2.87%.

Interest Rates

June 10-year T-notes (ZNM6) today are up by +12 ticks.  The 10-year T-note yield is down -3.4 bp to 4.326%.  June T-notes are moving higher today as reports of a US peace plan to end the war with Iran knocked crude oil prices down by more than -4%, reducing inflation expectations.  The 10-year breakeven inflation rate dropped to a 2.5-week low of 2.301% today. 

T-notes fell back from their best levels today after the US Feb import index ex-petroleum posted its largest increase in 4 years.  Supply pressures are also weighing on T-notes, as the Treasury will auction $28 billion in 2-year floating-rate notes and $70 billion in 5-year T-notes later today. 

European government bond yields are moving lower today.  The 10-year German bund yield is down -6.4 bp to 2.963%.  The 10-year UK gilt yield is down -10.6 bp to 4.852%.

The German Mar IFO business climate fell -2.0 to a 13-month low of 86.4.

ECB President Lagarde said, it is too early to determine the response to the war, and "we will not act before we have sufficient information on the size and persistence of the shock and its propagation."  She added that the initial shock may be smaller than in 2022, given a more benign macroeconomic backdrop.

UK Feb CPI rose +3.0% y/y, right on expectations.  Feb core CPI rose +3.2% y/y, stronger than expectations of +3.1% y/y.

Swaps are discounting a 64% chance of a +25 bp ECB rate hike at its next policy meeting on April 30.

US Stock Movers

Chip makers are moving higher today, a supportive factor for the overall market.  Advanced Micro Devices (AMD) is up more than +5%, and Intel (INTC) is up more than +4%.  Also, Marvell Technology (MRVL) is up more than +3%, and Microchip Technology (MCHP), NXP Semiconductors NV (NXPI), Qualcomm (QCOM), and Texas Instruments (TXN) are up more than +2%. 

Airline stocks and cruise line operators are climbing today, as WTI crude is down more than -4%, lowering fuel costs and boosting profit expectations.  Alaska Air Group (ALK) is up more than +4%, and United Airlines Holdings (UAL), Norwegian Cruise Line Holdings (NCLH), and Southwest Airlines (LUV) are up more than +3%.  Also, American Airlines Group (AAL), Delta Air Lines (DAL), Carnival (CCL), and Royal Caribbean Cruises (RCL) are up more than +2%. 

Cryptocurrency-exposed stocks are moving higher today, with Bitcoin (^BTCUSD) up more than +2%.  Strategy (MSTR), Riot Platforms (RIOT), and Coinbase Global (COIN) are up more than +4%. Also, MARA Holdings (MARA) is up more than +3%, and Galaxy Digital Holdings (GLXY) is up more than +2%.

Memory and data storage stocks are sliding today.  Sandisk (SNDK) and Seagate Technology Holdings Plc (STX) are down more than -6%, and Western Digital Corp (WDC) and Lam Research (LRCX) are down more than -4%.  Also, Micron Technology (MU) is down more than -3%. 

Braze Inc (BRZE) is up more than +20% after forecasting 2027 revenue of $884 million to $889 million, well above the consensus of $858.3 million.

ARM Holdings Plc (ARM) is up more than +15% to lead gainers in the Nasdaq 100 after saying it will start selling its own chips for the first time and expects to generate about $15 billion annually within five years. 

Chewy (CHWY) is up more than +13% after forecasting 2027 net sales of $13.60 billion to $13.75 billion, stronger than the consensus of $13.59 billion. 

Terns Pharmaceuticals (TERN) is up more than +5% after Meck & Co agreed to buy the company for about $6.7 billion, or $53 per share in cash.

General Motors (GM) is up more than +2% after Wolfe Research upgraded the stock to outperform from peer perform with a price target of $96.

KB Home (KBH) is down more than -4% after forecasting Q2 home deliveries of 2,250 to 2,450, below the consensus of 2,637. 

Earnings Reports(3/25/2026)

Chewy Inc (CHWY), Cintas Corp (CTAS), Jefferies Financial Group Inc (JEF), Karman Holdings Inc (KRMN), Paychex Inc (PAYX), PDD Holdings Inc (PDD).