US shares rose on Tuesday. The Dow gained about 300 points (0.60%) to near 48,500, the S&P 500 rose 1.1%, and the Nasdaq added 1.8%, led by technology stocks.
The March Producer Price Index showed slower wholesale inflation than expected. Headline PPI rose 0.5% month on month versus fears of about 1.2%, and rose 4% year on year versus a 4.6% consensus.
Core PPI excluding food, energy and trade services rose 0.2% month on month, after 0.5% in January and February. Final demand energy prices rose 8.5% and petrol increased 15.7%, while services prices were flat at 0.0%.
Markets also tracked movement in US–Iran talks. A White House official said a second round is under discussion, and reports said a follow-up could happen within days, before the current two-week ceasefire ends.
Tech shares stayed strong, with Oracle up about 5% after a 12% jump the prior session. Nvidia and Palantir also rose, while bank results were mixed, with Wells Fargo down over 5% and JPMorgan slightly lower.
Oil fell, with WTI down over 5% towards $93 a barrel and Brent down about 3% near $95. The IEA cut its 2026 demand forecast and now expects demand to contract.
With softer inflation data and hopes for an Iran ceasefire, the market’s fear is visibly receding, creating a favorable environment for risk assets. We should consider strategies that benefit from decreasing volatility, as the CBOE Volatility Index (VIX) has already dropped below 15 this week, a level not seen since the conflict began. This suggests that selling VIX futures or buying put options on volatility could be profitable as calm returns.
The technology sector is clearly leading this rally, driven by the persistent AI narrative and a flight back to growth stocks. We believe buying call options on the Nasdaq 100 ETF (QQQ) is a sound approach to ride this wave, as option market data already shows a put-to-call ratio at a two-month low. This mirrors the dynamic we saw in mid-2025 when inflation scares last faded and tech stocks began to outperform significantly.
Conversely, the energy sector looks vulnerable due to the sharp drop in crude oil prices and the IEA’s bearish demand forecast. We can act on this weakness by purchasing put options on oil futures or energy ETFs like the XLE. Historically, oil prices tend to shed their geopolitical risk premium very quickly, and with speculative net-long positions hitting a one-year high just last week, a further unwind could push prices lower.
The mixed bank earnings, particularly the weakness from Wells Fargo and cautious guidance from JPMorgan, signal potential underperformance in the financial sector. This creates an opportunity for bearish plays, such as buying puts on the Financial Select Sector SPDR Fund (XLF). Even as the broader market rises, this sector could lag due to concerns over net interest income in the current rate environment.
