Stocks opened to relatively broad weakness as oil prices climbed following a Wall Street Journal report that President Trump has told his aides to prepare for an extended blockade of Iran in order to compel it to give up its nuclear ambitions. The president doubled down on his stance that a deal with the U.S. will not come without Iran surrendering its nuclear ambitions, prompting concerns that both sides are preparing for a prolonged stalemate. Crude oil futures settled today's session $7.03 higher (+7.0%) at $106.98 per barrel..

As a result, the energy sector (+2.4%) was the only S&P 500 sector to finish with a gain wider than 0.2%, with Phillips 66 (PSX 173.49, +8.36, +5.06%) leading the advance after turning in a solid earnings report.

Visa's (V 334.86, +25.56, +8.26%) stellar beat-and-raise report offset broader weakness and a sharp decline from Robinhood Markets (HOOD 71.20, -10.87, -13.24%) in the financials sector (+0.1%), while T-Mobile US (TMUS 198.17, +11.45, +6.13%) and Starbucks (SBUX 105.50, +8.22, +8.45%) led strength in the communication services (-0.1%) and consumer discretionary (+0.1%) sectors.

The information technology sector (+0.2%) also managed a modestly higher finish as semiconductor names outperformed after two consecutive weaker showings. The PHLX Semiconductor Index (+2.4%) roughly halved its week-to-date loss, supported by strong post-earnings showings from Seagate Tech (STX 643.30, +64.27, +11.10%) and NXP Semi (NXPI 289.25, +58.86, +25.55%).

Intel (INTC 94.75, +10.23, +12.10%) also notched a double-digit gain.

On the macro front, today's April FOMC decision did not surprise in the sense that the FOMC voted to keep the Fed Funds Target Range unchanged at 3.5%-3.75%. Fed Governor Stephen Miran's dissent in favor of a rate reduction was also unsurprising.

The surprise with this directive is that it featured three Fed presidents - Hammack (Cleveland), Kashkari (Minneapolis), and Logan (Dallas) - dissenting over the language of the directive. Specifically, the three presidents, who supported maintaining the target range at 3.50-3.75%, did not support the inclusion of an easing bias in the statement at this time.

Additionally, Fed Chair Jerome Powell said he will continue to serve as a governor for a period of time after his term as chair ends on May 15, noting he plans to keep a low profile as a governor.

On the topic of inflation, Mr. Powell said, "In the near term, higher energy prices will push up overall inflation. Beyond that, the scope and the duration of the potential effects on the economy remain unclear."

Attention now turns to this afternoon's sizable batch of earnings reports, which will include results from four "magnificent seven" names in Amazon (AMZN 263.04, +3.34, +1.29%), Alphabet (GOOG 347.31, -0.19, -0.05%), Meta Platforms (META 669.12, -2.22, -0.33%), and Microsoft (MSFT 424.46, -4.79, -1.12%). All four names are up well over 10% this month as mega-cap tech has led the rebound from March lows, as the market attempts to look past the effects of the U.S.-Iran conflict.

However, massive capital expenditure plans related to AI investments have become a point of scrutiny across the group in recent earnings cycles, while today's headlines and increase in oil prices suggest that macro pressures could complicate the near-term outlook for both margins and demand. All told, the market remains at an inflection point, with elevated valuations in mega-cap tech set against rising input costs and geopolitical uncertainty. The upcoming earnings reports will be critical in determining whether recent leadership can be sustained or if a broader pullback is warranted.

• Russell 2000: +10.4% YTD
• S&P Mid Cap 400: +8.3% YTD
• Nasdaq Composite: +6.2% YTD
• S&P 500: +4.2% YTD
• DJIA: +1.7% YTD

Reviewing today's data:

• Weekly MBA Mortgage Applications Index -1.6%; Prior 7.9%
• February Housing Starts 1.356 mln; Prior was revised to 1.398 mln from 1.487 mln, February Building Permits 1.538 mln; Prior was revised to 1.386 mln from 1.376 mln, March Housing Starts 1.502 mln; Prior 1.356 mln, March Building Permits 1.372 mln; Prior 1.538 mln
  • The key takeaway from the report is that there was broad-based strength in starts by region but also broad-based weakness in permits by region. The latter is the better indicator for the impact of the Iran war and the uncertainty it has created because permits are a leading indicator.
• March Durable Orders 0.8% (Briefing.com consensus 0.5%); Prior was revised to -1.2% from -1.4%, March Durable Goods -ex transportation 0.9% (Briefing.com consensus 0.6%); Prior was revised to 1.2% from 0.8%
  • The key takeaway from the report is that there was a big jump (+3.3%) in new orders for nondefense capital goods excluding aircraft. This is a proxy for business spending, and it is believed to reflect in part the pickup in capital expenditures for AI initiatives.
• March Adv. Intl. Trade in Goods -$87.9 bln; Prior -$83.5 bln
• March Adv. Retail Inventories 0.7%; Prior 0.3%
• March Adv. Wholesale Inventories 1.4%; Prior 0.9%