Stocks rise despite escalating tensions in Iran
Tensions in the Middle East are reaching levels not seen since April. Markets don’t seem that bothered yet.
Stocks are rebounding and oil prices are flat despite the conflict in Iran reaching its testiest point in months.
The US and Iran exchanged attacks early Thursday morning after several days of hostilities, marking the biggest escalation since the early April ceasefire was announced.
The US Central Command said Wednesday evening that the latest “additional self-defense strikes” had been completed, catalyzing a bid for risk assets. But President Trump said in a Thursday morning Truth Social post that the US would strike Iran “VERY HARD TONIGHT” and also threatened to take over the country’s oil infrastructure.
Futures for the S&P 500 and Nasdaq Composite dipped after that post, but remained in the green on Thursday after each index had shed 3.3% and 5.3% in the past week, respectively.
The key indexes are getting a boost from major AI stocks — such as Sandisk, Applied Materials, Intel, Micron, and Corning — which are all up in premarket trading and on track to return some of their recent losses. After yesterday’s CPI print was a little cooler than expected, this morning’s PPI release was little hotter; PPI rose 1.1% month on month, ahead of expectations for a 0.7% gain.
Oracle signaled a further rise in capex and investment in AI infrastructure, which isn’t hurting the AI trade either — though it is weighing on Oracle’s shares.
Futures for Brent crude initially ticked down Thursday morning before climbing back up to previous levels, suggesting investors don’t necessarily see the escalations translating to a scarcity of oil. Iranian officials said the Strait of Hormuz, a key trading route for oil tankers, would close on Thursday morning. US Central Command said Wednesday evening that the key waterway was still open.
Travel companies — such as Delta Air Lines, United Airlines, and Royal Caribbean — which are sensitive to oil prices, also ticked higher in premarket trading on Thursday, giving back some of their recent losses.
