US equity moves were mixed on Tuesday. Dow futures held near 49,200 and the cash index rose about 0.1%, helped by Coca-Cola jumping 5% after results.
The S&P 500 fell 0.7% and the Nasdaq Composite dropped 1.3%, after both reached record highs on Monday. A Wall Street Journal report on slower growth at OpenAI weighed on chip and AI-linked shares.
Ceasefire Talks Lose Momentum
Ceasefire discussions involving Iran appeared to lose momentum. President Donald Trump cancelled plans to send Steve Witkoff and Jared Kushner to Pakistan, and suggested talks could happen by phone.
Iran’s Foreign Ministry spokesperson Esmaeil Baqaei said no meetings are planned between Tehran and Washington. White House press secretary Karoline Leavitt said the administration has discussed Iran’s offer to reopen the Strait of Hormuz, tied to ending the war and lifting the US blockade.
Oil prices rose as supply risk was repriced. WTI climbed about 3% to near $100 a barrel, while Brent gained 2% to above $110.
About a fifth of global oil flows through the Strait of Hormuz. The UAE said it will leave OPEC on 1 May, and it was OPEC’s third-largest producer in February behind Saudi Arabia and Iraq.
Tech Earnings And Fed In Focus
Nvidia fell more than 3%, Broadcom dropped over 4%, and AMD, Intel and Oracle ended down about 4%. The Fed decision is due at 18:00 GMT, with a press conference at 18:30 GMT, and consensus expects rates to hold at 3.75%.
Alphabet, Amazon, Meta and Microsoft report after Wednesday’s close, with Apple on Thursday. Thursday also brings Q1 advance GDP and March PCE.
With crude oil pushing past $100 per barrel on stalled Iran talks, we should anticipate continued tension pricing into the market. The surprise announcement of the UAE’s exit from OPEC, removing its roughly 4 million barrels of daily production from the group’s direct coordination, further complicates global supply outlooks. We should be looking at call options on WTI futures or broad energy ETFs to capitalize on potential price spikes from any further escalation.
This setup has echoes of past Middle East supply shocks that have caused significant market disruption. Roughly 21% of the world’s daily petroleum liquids pass through the Strait of Hormuz, making it the most critical chokepoint we must monitor. Any actual disruption there could easily send oil prices surging past the highs we saw back in 2022, justifying positions that benefit from rising volatility in the energy sector.
The sell-off in technology stocks, sparked by slowing growth concerns at OpenAI, creates an opportunity ahead of this week’s earnings deluge. We saw how mega-cap tech stocks can move over 15% after an earnings print, as happened several times in the 2022-2023 period. Using straddles or strangles on individual names like Alphabet and Amazon allows us to play the expected volatility without needing to predict the direction of the move.
Tomorrow’s Federal Reserve decision is the central event, where we will get a clearer picture of how policymakers view the stagflationary threat of high energy costs and softening growth. The PCE inflation and Q1 GDP data on Thursday will provide the hard numbers to either confirm or deny these fears. We can use puts on broad market indexes like the S&P 500 as a portfolio hedge against a hawkish Fed or weak economic prints later this week.
