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Briefing.com Summary:
*Iran's foreign minister said passage for all commercial vessels is completely open through Strait of Hormuz during period of ceasefire in Lebanon.
*Oil prices are down 10% to $85.00/bbl.
*Netflix is down big on a Q2 guidance disappointment.
We will tell it to you straight up. It has been straight up for the major indices since March 30. The Nasdaq is on a 12-session win streak, and the Nasdaq, S&P 500, and Dow Jones Transportation Average are at record highs.
There is a lot of momentum in the market, much of it wrapped up in gains for the mega-cap stocks, and a lot of momentum behind the thought that the Iran war will end soon. Axios is reporting that the U.S. and Iran are in negotiations over a three-page peace plan, with the U.S. contemplating releasing $20 billion in frozen funds to Iran in exchange for giving up its stockpile of enriched uranium.
Furthermore, Iran's foreign minister posted to X today that passage for all commercial vessels through the Strait of Hormuz is completely open for the remaining period of the 10-day ceasefire in Lebanon. The U.S. Navy is going to determine that, but it is the spirit of the announcement that is registering for the market.
The thought that the war could end soon has translated into a sharp drop in oil prices and a calming of concerns about a prolonged global economic slowdown. In turn, it has put the focus back on the earnings outlook, which is being viewed with rose-colored glasses.
We're not saying that to suggest the market is definitely wrong for seeing things that way. Rather, we're saying it simply to point out that the market is expecting nothing but positive things on the earnings front.
That view is aligned with the broader earnings picture, but of course there will be individual disappointments along the way. Netflix (NFLX) is one of those disappointments today. It is down 10%, not because it came up shy of Q1 estimates, but because its Q2 guidance was below expectations. It also unnerved some investors to hear that co-founder and Chairman Reed Hastings will not stand for re-election to the Board.
The sell-off in NFLX, however, is being interpreted as a company-specific issue and not a larger warning sign for growth stocks.
Currently, the S&P 500 futures are up 55 points and are trading 0.8% above fair value, the Nasdaq 100 futures are up 235 points and are trading 0.9% above fair value, and the Dow Jones Industrial Average futures are up 539 points and are trading 1.1% above fair value.
This upside bias is being driven by further gains in the mega-cap stocks, oil prices that are down 10% this morning to $85.00/bbl, sliding Treasury yields, and a fear of missing out on further gains in a straight-up move.
