The Truce Is Loose

U.S. equity markets pushed higher ahead of earnings season, brushing off rising benchmark interest rates and a more unfavorable turn in the Middle East conflict as Iran risks resurfaced. Iran war developments returned to center stage as the tentative U.S.-Iran ceasefire unraveled after another round of strikes and Iran’s reported closure of the Strait of Hormuz rattled markets again. Tanker-tracking data showed Hormuz flows recovering, but momentum faded into the weekend, lifting oil and gasoline from multi-month lows as traders repriced renewed risks to physical energy flows again. The S&P 500 gained 1.4% for the week, extending its rebound as investors rotated toward large-cap growth ahead of earnings season, with analysts projecting nearly 30% earnings growth this quarter. The focus returns to the Fed, with a critical slate of inflation data in the week ahead that could determine whether Chair Kevin Warsh’s hawkish warnings translate into a rate hike by the end of the month.