US stock index futures were firmer across the board in early trade on Wednesday, making back a modest yet significant proportion of yesterday’s losses. This morning’s rally came after President Trump extended the ceasefire with Iran, providing some relief to investors previously concerned about this evening’s deadline for the agreement’s expiration.
Yesterday, the Dow, S&P 500 and NASDAQ all fell 0.6%, while the Russell 2000 closed 1.0% lower. Earlier comments from Mr Trump suggested that the US was ready to resume military action, with threats to cause serious damage to Iran’s civilian infrastructure.
Source: TN Trader
On one hand, the extended ceasefire could be viewed positively, giving another opportunity for talks to take place. But the delay also raises concerns that the conflict could drag on despite continued diplomatic efforts. The Trump administration should be worried that Tehran spurned the talks, even as the President spins it as a sign of Iran’s fractured leadership.
Instead, it could indicate the regime’s hardened intent to carry on the war. Mr Trump confirmed that the US would continue its blockade of Iranian ports while remaining prepared for further action if negotiations fail. But when, or if, further talks take place is far from certain. Iranian state media reported negotiators had described further talks with the US as a “waste of time.”
Despite these developments, the NASDAQ, S&P and Russell remain close to their all-time highs. The Dow is lagging a touch, but it does appear that investors are still keen to add to their exposure.
Most seem convinced that the war will soon be over, or that it will have little effect on the US economy, even if energy prices remain relatively elevated. Supporting the latter take, the first quarter earnings season has got off to a strong start.
Analysis from FactSet shows that of the 10% of S&P 500 constituents that have reported so far, 88% have beaten expectations for earnings per share, while 84% have exceeded forecasts for revenues.
Meanwhile, investors have shrugged off any concerns they may have had over losses in private equity, as well as the return on investment in AI. Today’s key earnings updates come from Tesla, IBM, Texas Instruments, Boeing and AT&T.
