War of Words, Semiconductors Surge, China Talks Set, Fed on Deck
Iran answers U.S. peace talks with its own demands, Arm Holdings and Advanced Micro Devices up big, China-U.S. talks on calendar, charting the S&P.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Market_Recon_TSP1_KL
There's an answer. Is it "the" answer? Markets are unsure. In the meantime, Asian stocks are trading somewhat lower. European stocks are opening slightly lower. Oil has traded higher. Treasuries are selling off a bit (yields higher). Finally, U.S. equity index futures are struggling through the wee hours of Thursday morning.
The answer? On Wednesday, a supposedly senior official (Who is actually considered senior in Iran right now?) told the Iranian news network Press TV that his nation had formally rejected the American 15-point proposal to end the war and insisted that the war would end when Tehran decides, not the U.S.
The official said, "Iran will end the war when it decides to do so and when it's conditions are met." The official mentioned that Iran will continue to inflict what he called "heavy blows" on their enemies until his nation's demands are met. In his statement, the still unknown official declared that, "No negotiations will be held" until Iran's five conditions are met. Those five conditions are:
1) Complete halt to "aggression and assassinations" by the U.S. and Israel.
2) Mechanisms put in place to ensure that war is not remimposed on Iran.
3) Payment of war reparations to Iran would be guaranteed.
4) Hostilities terminated against Iranian proxies in the region.
5) Formal recognition of Iran's sovereignty over the Strait of Hormuz.
On That Note....
- Israel conducted extensive strikes in central Iran.
- Iran launched drone and / or missile attacks at Israel, Saudi Arabia, Kuwait, Bahrain and the UAE overnight.
- Chinese Foreign Minister Wang Yi commented that a "glimmer of hope for peace has emerged," as both sides are at least talking.
- The Wall Street Journal is reporting that President Trump has told advisers to work with a four-to-six-week timeline in regard to the war's end.
Wednesday
Financial markets reacted well on Wednesday to the 15-point plan for peace in the Middle East that the U.S. had sent to Iran through Pakistani leadership. The S&P 500 rallied for a gain of 0.54% as the Nasdaq Composite added 0.77%. As they had on Monday, all of the mid-major to major U.S. equity indexes closed in the green. The Dow Jones U.S. Semiconductor Index led the way, gaining 1.3% for the session, led by Arm Holdings' (ARM) 16.4% run as well as the 7.3% and 7.1% gains made by Advanced Micro Devices (AMD) and Intel (INTC) respectively. The small- to mid-cap indexes all gained between 0.86% and 1.23%, outperforming broader markets.
Moving on to breadth, nine of the 11 S&P sector SPDR exchange-traded funds closed out Wednesday's regular trading session in the win column, led by the Materials (XLB) , followed by Health Care (XLV) and the Discretionaries (XLY) . Energy (XLE) led the losers but was down less than 0.5%. There was no clear pattern of out- or under- performance across cyclicals, growth sectors or defensives.
Winners beat losers by a seven-to-three margin at the NYSE and by about two-to-one at the Nasdaq. Advancing volume took a near-commanding 69% share of composite NYSE-listed trade and a 68% share of Nasdaq-listed activity. The catch? Yes, there was a catch. Aggregate trade was lower on a day-over-day basis across NYSE-listings (-6.5%), Nasdaq-listings (-5.1%) as well as across the membership of the S&P 500.
The Chart
While Wednesday was a nice day for U.S. equities, readers will spot a couple of problems with the daily chart of the S&P 500.
For one, the index was rejected at its 200-day simple moving average and share prices retreated from there. This exhibits a reluctance by portfolio managers to accept increased exposure to risk while the short-term outcomes of the war in Iran and subsequently oil prices remain unknowable.
Relative Strength is rising but remains neutral. The daily moving average convergence divergence is still postured quite bearishly, though there has been some moderate improvement in the way that indicator appears. For these reasons, Wednesday did not result in a "day of confirmation" of the change in trend that had been Monday's result despite the required "pause" on Tuesday. Could that confirmation still occur? Of course. That can take days, but Wednesday was not that.
Related: A Market Trapped in the Fog of War
Meeting Reset
Due to the war in Iran, the long-awaited meeting between Pres. Trump and mainland Chinese Pres. Xi Jinping will take place in Beijing on May 14 and 15. U.S. First Lady Melania Trump will host Chinese Madame Peng Liyuan for a reciprocal visit in Washington later this year. The summit in Beijing will happen, ultimately six weeks later than had been previously scheduled and is key to improving conditions of trade between the planet's two largest economies. In particular focus will be the movement of rare earths and critical minerals to the U.S. and of AI-capable technology towards China.
Fed on Deck
There are four Fed governors set to speak on Thursday evening, after the closing bells down at 11 Wall St. and up at Times Square. While I do not expect Vice Chair Philip Jefferson and Michael Barr to be aggressive in any way in addressing the trajectory of monetary policy going forward, I would expect Lisa Cook to sound hawkish and I would expect Stephen Miran to sound dovish. All four of these individuals are in seats with permanent policy voting rights. What we see in this morning's weekly report on initial and continuing state level jobless claims will likely impact their words.
Interesting...
Anyone else notice that the U.S. Army, as of April 20, will just increase the maximum enlistment age from 35 to 42. The problem is that while enough young applicants are showing up at recruiters' offices across America, 71% of American high school grads and college-aged youth do not even qualify for military service primarily due to obesity, but also due to drugs, physical or mental issues, past misconduct or failure to pass the aptitude test.
The U.S. Navy and U.S. Air Force both currently cap enlistment at 41 years of age. The Marine Corps still caps enlistment at 28 years of age. The Army currently reports an average enlistment age of 22.7, up from 21.1 a decade ago, which could be a sign of subdued demand for civilian labor. This is a sudden change as fiscal 2025 was the best year for U.S. military recruitment in 15 years. The change will extend to the National Guard, which is the combat side of the Army Reserve and the Reserve itself.
Even with 12 years of service, I can't get my adjusted age down to 42, but if I were a slightly younger man, this would excite me. Imagine combining Tricare with Medicare. That would be incentive enough. Perhaps, I can get a waiver. Doubt it, in my 60s. That said, I would only apply for a waiver if I could be guaranteed infantry. I know I could still hang with those kids. A boy can dream.
Economics
(All Times Eastern)
08:30 - Initial Jobless Claims (Weekly): Expecting 210K, Last 205K.
08:30 - Continuing Claims (Weekly): Last 1.857M.
10:30 - Natural Gas Inventories (Weekly): Last +35B cf.
11:00 - Kansas City Manufacturing Index (Mar): Expecting 2, Last 10.
The Fed
(All Times Eastern)
4:00 p.m. - Speaker: Reserve Board Gov. Lisa Cook.
6:30 - Speaker: Reserve Board Gov. Stephen Miran.
7:00 - Speaker: Federal Reserve Vice Chair Philip Jefferson.
7:10 - Speaker: Reserve Board Gov. Michael Barr.
Today's Earnings Highlights
(Consensus EPS Expectations)
Before the Open: (CMC) (1.30)
After the Close: (AGX) (1.98)
At the time of publication, Guilfoyle had no position in any security mentioned.
