Futures are lower, but well off session lows,after a weekend of chaos in the Strait of Hormuz cast doubt over US-Iran peace talks ahead of Tuesday’s ceasefire expiration. On Saturday, Iran said the Strait will be closed until the US blockade is lifted, with ships reporting attacks. The US then fired and seized an Iranian-flagged ship on Sunday. Both headlines point to a re-escalation, as Iran military has now vowed to retaliate. It remains unclear whether the peace talks will continue ahead of the April 22nd deadline: POLITICO yesterday reported that Trump will continue peace talks with Iran in Pakistan on Monday, while Iran said in a news conference that they have “no plan” for next round of negotiation (here), although subsequent reports from APindicated the opposite. There’s a big earnings week ahead, and top Wall Street strategists expect resilient numbers to support equities. As of 8:00am ET, S&P futures are down 0.5% following a succession of record highs;the Nasdaq is down 0.4% and set to end a near-record stretch of 13 consecutive gains.Pre-market, Mag 7 are all lower with NVDA (-1.2%), MSFT (-1.0%) and META (-1.0%) being the notable laggards. European stocks slid 1.1% while Asian stocks rose in a delayed catch up to the Friday melt up in the US. Bond yields rose sharply in Europe, whereas the moves in Treasuries were more modest. The dollar was little changed, erasing an earlier gain. WTI crude oil jumped $4.6 (or 5.5%) to $88.5; both base metals and precious metals are lower with gold briefly dropping below $4,800 an ounce, before recovering. The US session is quiet for scheduled data, while Fed’s external communications blackout period has now begun ahead of the April 29 policy announcement.

In premarket trading, Mag 7 stocks were mostly lower (Apple unchanged, Tesla -0.7%, Alphabet -1%, Amazon -1%, Meta -0.9%, Microsoft -0.8%, Nvidia -0.9%)

In other corporate news,regulators across Asia are stepping up scrutiny of cybersecurity risks in their financial systems, as concerns over Anthropic PBC’s latest AI model Mythos spread. Blue Origin’s flagship New Glenn rocket launched to space on its third flight, reusing a booster for the first time but failing to correctly place the satellite it was carrying into its intended orbit.In deals,American Airlines said it’s not engaged with or interested in any discussions regarding a merger with United Airlines. QXO said it’s acquiring insulation firm TopBuild for about $17 billion, making it the second-largest publicly traded building products distributor in North America. Patrick Industries and rival recreational-vehicle supplier LCI Industries are in talks to combine.

Monday’s risk-off moves are denting a rally that had erased all of the war-driven losses in US stocks. President Donald Trump and Iranian officials offered disparate views on the next stage of the war, leaving it unclear whether the sides would meet for talks on Tuesday, with a truce set to expire shortly. Sentiment was dented after oil and natural gas prices jumped as Hormuz remained closed early Monday. Iran initially said ships could pass before abruptly stopping traffic less than 24 hours later, while the US Navy fired upon and boarded an Iranian-flagged cargo ship in the Gulf of Oman. The energy crisis is rippling out in various ways.The WSJ reported that the UAE is said to be in talks with the US about a financial backstop in case the Iran war plunges the country into further crisis. The EU is planning to propose measures to “optimize” jet fuel distribution among member states, while China is becoming more dependent on the US for ethane gas. And traders are reassessing their playbooks as the war forces governments to become more self reliant.

Traders believe pressure on both parties to reach a deal remains high, even as volatility during negotiations is likely to be elevated. Iran’s state-run news agency cited President Masoud Pezeshkian as saying the war was in no one’s interest and that diplomatic avenues should be used to lower tensions.

“While the developments from the weekend certainly cooled the optimism, it did not derail it completely,”said Stephan Kemper, chief investment strategist at BNP Paribas Wealth Management. “Markets keep expecting a near-term solution which will allow energy to flow again.”

Technology stocks took a breather on Monday after the sector drove much of the rebound in US equities, with the Magnificent Seven up 20% since the US benchmark hit its 2026 bottom on March 30. Despite the re-escalation in the Middle East, top strategists say the market can keep rallying despite the turmoil. JPMorgan’s Mislav Matejka disagrees with bearish views that revolve around stagflation and expects resilient earnings to keep supporting the market. Ben Snider at Goldman Sachs says strong but narrow positive earnings revisions support a narrow market rally, while Morgan Stanley’s Mike Wilson notes that early 1Q results have been strong and the earnings recovery is intact.

The earnings season, meanwhile, has been off to a strong start. S&P 500 companies that have pusblished their results so far have seen their profitscome in 11% above expectations,on aggregate, data compiled by Bloomberg Intelligence showed. Major companies releasing earnings this week include Tesla Inc. and Boeing Co. on Wednesday, followed by Intel Corp. the following day. The economic impact of seven weeks of war in the Middle East will also begin to emerge this week when purchasing manager indexes are published Thursday. “Earnings season is supportive and does matter, but the dominant driver is geopolitics. Once a deal is reached, attention will shift back to earnings,” said Patrik Lang, chief investment strategist at Global Gate Asset Management. “The strength may be somewhat concentrated, as much of the growth continues to come from the Magnificent Seven.”

While the situation in the Middle East remains in flux, traders will alsofocus on Kevin Warsh’s Senate confirmation hearing this week to lead the Federal Reserve. The US two-year yield is once again below the central bank’s 3.75% ceiling after trading above the level for much of the war.

Besides Warsh's Tuesday Senate confirmation hearing, in economic data, March retail sales are due Tuesday, with economists projecting a sizable jump in overall retail sales mainly due to sharply increased spending on gasoline. PPI is due on Thursday, followed by the University of Michigan’s final consumer sentiment index for April on Fridat. The preliminary reading set a record low.

Source: ZeroHedge News