FUTURES
Stock futures are rebounding this morning after a rough Monday. S&P 500 futures are up 0.35% to 7,255, Dow futures are adding 116 points (+0.24%) to 49,195, Nasdaq futures are up 0.55% to 27,929, and Russell 2000 futures are gaining 0.50%. The VIX — Wall Street’s fear gauge — is easing, down nearly 3% to 17.75, suggesting some relief after yesterday’s selloff. Yahoo FinanceYahoo Finance
THE WAR — WHAT HAPPENED YESTERDAY
The big story driving markets Monday was a major escalation in the Middle East. Stocks fell on Monday as the latest developments in the Middle East sent oil prices sharply higher. The Dow shed 557 points, or 1.13%, closing at 48,941. The S&P 500 slid 0.41% to 7,200, and the Nasdaq lost 0.19% to close at 25,067. CNBC
The trigger: Iran fired on the United Arab Emirates for the first time since a fragile ceasefire took hold in early April. The UAE’s Defense Ministry said its air defenses engaged 15 missiles and four drones. One drone sparked a fire at a key oil facility in Fujairah, wounding three Indian nationals. NPR
The Fujairah attack was particularly significant. The UAE has a pipeline at Fujairah, on the Gulf of Oman, built specifically to bypass the Strait of Hormuz — and that is what came under attack, along with a UAE-linked tanker near the strait. CNN
Trump’s response was sharp. President Trump told Fox News that Iran will be “blown off the face of the earth” if it targets U.S. ships protecting commercial vessels in the Strait of Hormuz. However, Trump stopped short of declaring that the ceasefire had been violated. CNBCCNBC
On the military side, CENTCOM commander Admiral Brad Cooper told reporters that after the U.S. began its “Project Freedom” operation to restore shipping through the strait, Iran fired cruise missiles at Navy ships and drones at commercial vessels. All were engaged, no U.S. ships were hit, and six Iranian small boats were eliminated by U.S. forces. Iran denied the boats were sunk. Axios
This morning, the UAE partially closed its airspace and schools across the country shifted to remote learning through Friday. The ceasefire, now about four weeks old, is hanging by a thread. CNN
OIL
Oil spiked Monday and remains elevated but is pulling back slightly this morning. West Texas Intermediate crude is down about 2.2% to $104.10 per barrel, while Brent crude is off 1.38% to $112.90. That’s still very high — WTI settled at $106.42 Monday, up 4.39%, while Brent jumped 5.8% to $114.44. Energy stocks were the only S&P 500 sector that finished in the green Monday. TheStreetCNBC
OTHER MARKET MOVERS
A few major stories away from the war are moving individual stocks this morning.
Amazon blindsided the logistics industry Monday by launching its own freight, distribution, and shipping service. GXO Logistics shed 11%, UPS fell about 10%, FedEx and C.H. Robinson each sank around 9%. Amazon shares rose 1%. UPS is edging back up slightly in premarket today. CNBC
GameStop is in the news for a strange reason. eBay climbed 8% on reports that GameStop is making a $56 billion takeover bid for eBay. GameStop itself is down slightly in premarket after finishing Monday’s session down 10%. Charles Schwab
Norwegian Cruise Line fell 6.5% after posting mixed earnings — the company beat profit estimates but missed on revenue and guided lower for the rest of the year, citing Middle East disruptions and high fuel costs. Charles Schwab
On the positive side, Tyson Foods rose after posting strong fiscal second-quarter earnings, and Bitcoin climbed 2.3% to around $80,740, breaking past the $80,000 level for the second consecutive session. TheStreet
THE BIGGER PICTURE
Earnings season has been strong. With 63% of S&P 500 companies reported, blended earnings growth is running at an impressive 27.1%, according to FactSet. That’s keeping bulls engaged even as the war creates volatility. All eyes this week are on Friday’s April jobs report, which could set the tone for Fed expectations heading into the summer. Charles Schwab
The war remains the wildcard. With the ceasefire fraying and both sides trading fire in and around the Strait of Hormuz, energy markets will stay on edge. Watch oil closely — if WTI pushes back above $110, expect equities to give back this morning’s gains fast.
Good luck out there today.
