The negotiations between the United States and Iran began at 11:00 AM local time. After three rounds of talks lasting 21 hours, no agreement was reached between the two sides.
This week, the earnings reports of major banks will be the highlight on the schedule.$JPMorgan (JPM.US)$ 、 $Wells Fargo & Co (WFC.US)$ 、 $Bank of America (BAC.US)$and$Citigroup (C.US)$, as well as investment banking giants$Morgan Stanley (MS.US)$and$Goldman Sachs (GS.US)$will also announce their financial results.
In the technology sector,$Netflix (NFLX.US)$is expected to report its first-quarter performance. In contrast, the economic data calendar will be relatively light.
Traders will also closely monitor developments in the Middle East. In Islamabad, the capital of Pakistan, three rounds of U.S.-Iran negotiations began at 11:00 a.m. local time and lasted for 21 hours, but no agreement was reached.
US-Iran talks collapse
After nearly 21 hours of intensive negotiations and consultations, the United States and Iran issued separate statements on April 12 local time, stating that no consensus had been reached and the talks had ended. On the same day, US Vice President Vance stated at a press conference that the US had clearly outlined its ‘red lines,’ but Iran ‘chose not to accept the US conditions.’ The Iranian side emphasized that ‘excessive US demands have hindered the achievement of a common framework and agreement.’ Currently, the time, location, and plans for the next round of US-Iran talks have not been announced.
On April 12 local time, US President Trump posted on social media platforms stating that, effective immediately, the US Navy would begin blockading all vessels attempting to enter or leave the Strait of Hormuz, intercepting and inspecting all ships paying tolls to Iran in international waters while clearing mines laid by Iran in the strait. Trump noted that Iran had promised to keep the Strait of Hormuz open but failed to fulfill it. He added that Iran ‘knows how to end the current situation.’
Trump also stated that the US would blockade the Strait of Hormuz, which would take some time, but the cleanup operation in the strait would not last long. Trump mentioned that NATO wished to assist in handling matters related to the Strait of Hormuz and that the US was deploying additional conventional minesweepers.
On the 12th, U.S. President Trump issued a new threat to Iran, stating that ‘at the appropriate time, we will be fully “ready,” and our military will end Iran’s remaining forces.’
Gloomy economic data
The two most important economic data points released last Friday made investors uneasy—U.S. inflation hit its largest increase in four years, while consumer confidence reached a record low.
On the other hand, these two data points also provided investors with insight into what may be a fleeting period.
The Consumer Price Index (CPI) for March showed that overall prices rose by 0.9% last month, marking the largest monthly inflation increase since June 2022. This was mainly due to surging energy prices following the outbreak of the U.S.-Iran war. Although signs of de-escalation remain fragile, the market hopes that oil prices, which have been the main driver of this inflation, may stop rising in the coming weeks.
Similarly, the preliminary survey of consumer sentiment by the University of Michigan for April showed that its index had dropped to an all-time low. However, nearly all (98%) of the survey responses were collected before the ceasefire was announced last Tuesday.
Olivier Allen, chief U.S. economist at Pantheon Macroeconomics, wrote on Friday that the decline in confidence foreshadows a slowdown in consumer spending, ‘even if the extent of the deterioration it shows remains unclear.’
Similarly, Rick Rieder, Chief Investment Officer of Global Fixed Income at Blackrock, wrote in a report after the release of the CPI data that these readings “are not point-in-time indicators but reflect pricing trends over a specific period.”
This means that, in Rieder’s view, more important than the single-month inflation data is: ‘What does the surge in oil, natural gas, and other industrial commodities (including gases like helium) mean for the global economy in the coming period?’
In other words, the market had long anticipated a spike in inflation, and consumer sentiment would not be favorable either. This expectation was confirmed on Friday.
How these figures will (or will not) respond to the progress of geopolitical conflicts triggering extreme volatility will better explain why investors initially cared about these economic dynamics—namely, how the economy might influence the Federal Reserve’s next move.
Oil prices
Since the outbreak of the U.S.-Iran conflict, the most important figure in financial markets has been oil prices.
As of last Friday, WTI crude oil was trading at just below $98 per barrel. Before the onset of the war, this price was approximately $68.
Looking further down the futures curve, crude oil for July delivery is trading near $85. The current daily spot price refers to contracts for May delivery.
Thus, if July oil prices do converge toward that level—in other words, if ‘oil prices’ drop by 15%—there is potential for equities to return to all-time highs.
Julian Emanuel, Head of Equity, Derivatives, and Quantitative Strategy at Evercore ISI, stated: ‘We are benchmarking against the WTI July contract. Our research shows that, given the diminished importance of oil to both the economy and the stock market, a WTI price around $80-$85 would essentially not pose a substantial obstacle to the equity market.’
As demonstrated this week, if oil prices stop rising, the stock market tends to rise—or at least stop falling. Until circumstances change, this remains a straightforward logic.
The bleak performance of software stocks
In the latest phase of the artificial intelligence (AI) boom, the biggest losers have consistently been software stocks. This sell-off has continued to accelerate this week.
$iShares Expanded Tech-Software Sector ETF (IGV.US)$ Last week, it fell by more than 7%. Since the beginning of this year, IGV has plummeted by 30%. Of course, this figure still masks even sharper declines suffered by some of the fund’s constituent stocks.
$Applovin (APP.US)$ 、$Intuit (INTU.US)$and$ServiceNow (NOW.US)$ The share prices of these companies have fallen by over 40% since the start of this year.
The largest “contributor” to IGV’s decline this year—$Salesforce (CRM.US)$ —has dropped by more than 35% cumulatively this year.
$Microsoft (MSFT.US)$ 、$Palantir (PLTR.US)$ and$Oracle (ORCL.US)$ —these stocks have also fallen by more than 25% this year.
In addition to the current popularity of Vibe coding impacting software stocks, private credit fund managers are downplaying concerns about their exposure to the software industry, drawing attention.
However, WSJ analysis shows that the actual software exposure of four major funds (Blue Owl, Blackstone Bcred, Ares Capital, Apollo Debt Solutions) is much higher than reported. The average declared exposure is approximately 19%, while the actual figure is around 25%. Blue Owl’s exposure rose from 11.6% to 21%, and Blackstone’s from 25.7% to 33%.
The reason lies in inconsistent classification: many software companies are categorized under other buckets such as healthcare, education, or IT services, leading to an underestimation of exposure. Software loans carry the highest leverage ratios and often involve SaaS enterprises, making them highly vulnerable to AI disruptions and public market crashes. Some funds have quietly reclassified their loans. This lack of transparency has heightened investor concerns, resulting in record redemptions from private credit funds in the first quarter, highlighting risks associated with portfolio quality amid rapid growth.
Thus, although indices paint a resilient picture of the stock market, internal divergences within the market have led to the cleansing of entire industry sectors.
However, not all news regarding AI-related transactions is negative. For instance, companies involved in the AI hardware sector have consistently been market leaders. $VanEck Semiconductor ETF (SMH.US)$ The cumulative increase this year has exceeded 20%.
The constituent stocks of the fund include $Intel (INTC.US)$、$Applied Materials (AMAT.US)$ 、$Lam Research (LRCX.US)$and$Marvell Technology (MRVL.US)$ and other companies. Each of these stocks has risen by more than 50% this year.
The impact of AI technology on the stock market is a mixed blessing. $Taiwan Semiconductor (TSM.US)$ The company announced its Q1 revenue data, showing a significant year-on-year increase of 35%, setting a new historical high. The growth was mainly driven by the continued strong demand for advanced AI chips from major clients such as Apple and NVIDIA. This data confirms the resilience of AI computing power demand, even amid supply chain concerns triggered by the Middle East conflict, with AI chip demand remaining robust.
Meanwhile, the release of Anthropic Mythos model is considered to potentially introduce new attack vectors at the capability level, drawing significant attention from financial regulators. This event marks the comprehensive penetration of AI safety regulation from the tech industry into the financial system, carrying important implications for AI-related industrial chain entities (such as Anthropic, Microsoft, Google, etc.) and the direction of fintech regulatory policies.
AI-powered earnings insights in three steps to establish an options strategy! Open Futubull > Stock Page > Click [Company] >Earnings Express
Editor/Rocky
