Good morning,
Following a third consecutive down week for the major indices — the S&P 500 declined -1.60% last week — the weekend brought little clarity on how or when the war with Iran may end. Yet this morning, markets are behaving as if something constructive happened. Oil prices are lower and S&P 500 futures are up about +0.80% as of 8:00 a.m. ET.
It’s worth noting that markets also rallied at the start of last week, only to give those gains back as the week progressed. Déjà vu — or something more durable? Personally, I lean toward the sooner-rather-than-later camp on a resolution, but I cannot point to any new information that explains this morning’s optimism. For now, it looks more like a replay of last Monday than a genuine shift in the narrative.
Aside from the war this week — is there really an “aside from the war”? — there are several potential market catalysts. Nvidia’s Global Technology Conference (GTC) begins today and runs through Thursday, typically one of the most closely watched events in the technology sector. It is also a central-bank-heavy week. The Federal Reserve concludes its meeting Wednesday with Chairman Jerome Powell, now something of a lame duck given expectations that Kevin Warsh may replace him in May — a transition that could prove politically bumpy. The Bank of Japan and the European Central Bank both meet on Thursday.
Still, it’s difficult to imagine these catalysts gaining much traction while war headlines dominate. For the moment, the conflict feels like a wet towel thrown over nearly every other market narrative. One can hope that changes soon — even if we all know hope is not an investment strategy.
Be well,
Mike