Market Context
The week of April 14–18 produced one of the more striking market sequences of the year. The S&P 500 recorded its first close above 7,000, finishing the session at 7,022.95, while the Nasdaq posted its first close above 24,000, closing at 24,016.02 — both at record highs. CNBC The move was driven by a combination of strong bank earnings, growing optimism over a peace framework between the US and Iran, and a sharp drop in oil after Iran formally announced the Strait of Hormuz was reopening. By Friday, however, Iran reversed course and closed the Strait again in response to the US naval blockade, with two Indian-flagged ships coming under fire in the waterway. Wikipedia The week closed with the geopolitical situation unresolved and equities at all-time highs — a combination that markets have increasingly learned to hold simultaneously.
Key Signals
Bank earnings confirmed the financial system is intact. JPMorgan reported net income of $16.49 billion, or $5.94 per share, on revenue of $50.54 billion — both well ahead of consensus. Fixed income trading revenue rose 21% to $7.08 billion, and investment banking fees climbed 28%. CNBC Goldman Sachs posted Q1 net revenues of $17.23 billion and EPS of $17.55, with annualised return on equity of 19.8% — its second-highest quarterly revenue on record. sec Six weeks of geopolitical volatility were, for the major trading desks, a commercial opportunity.
The IMF cut global growth and raised inflation in the same breath. The April World Economic Outlook lowered global growth projections to 3.1% in 2026, while global headline inflation is projected to rise modestly before resuming its decline in 2027. The IMF flagged that a longer or broader conflict could significantly weaken growth and destabilise financial markets. International Monetary Fund
Oil's direction is still entirely dictated by Hormuz. Brent crude plunged 10% to below $90 per barrel on Friday after Iran's foreign minister announced the Strait was fully open to commercial traffic, hitting near five-week lows as markets priced in supply restoration. TRADING ECONOMICS The move came and went within days. The energy risk premium has not been structurally removed — it has simply been repriced for each headline.
Equity markets are decoupling from macro fundamentals. In less than three weeks, the Nasdaq's correction and the S&P 500's pullback were completely erased. Trailing 12-month inflation for March jumped to 3.3%, and the Cleveland Fed's nowcasting tool estimates April at 3.58% — a level that gives the Fed no latitude to cut. The Motley Fool Stocks at record highs and a Fed that cannot ease is an unusual combination to sustain.
Retail is beginning to chase the rally. JPMorgan's client flow data showed retail buying activity rebounding sharply, with overall participation rising to the 55th percentile from roughly the 10th percentile just days earlier. Single-stock purchases climbed to the 71st percentile relative to the past year. CNBC Late-stage retail participation in a momentum-driven rally is a signal worth noting, not ignoring.
Stock Market Performance & Other Assets
Equities
By Friday's close, the Dow Jones Industrial Average stood at 49,447, up 1.79% on the day. The Nasdaq Composite reached 24,468, up 1.52%, and the VIX dropped to 17.48 — its lowest level since before the conflict began. Yahoo Finance European markets also recovered strongly. Germany's DAX gained 2.27% on Friday, closing at 24,702. France's CAC 40 rose 1.97% to 8,425, and the Euro Stoxx 50 advanced 2.10%. Yahoo Finance Japan's Nikkei 225 hit a record Thursday amid a broader rally in Asian markets CNBC, though gave back some ground by Friday's close.
Commodities
Brent crude plunged 10% on Friday to below $90 per barrel on the Hormuz reopening announcement TRADING ECONOMICS — a stark contrast to the $103 it was trading at on Monday morning following the US naval blockade announcement. As of Monday, April 13, Brent had been trading at approximately $103 per barrel, up sharply from the $60–70 range seen earlier in the year. VALR Gold maintained its elevated position throughout the week, reflecting continued institutional demand for portfolio insurance.
Fixed Income & Crypto
Forward curves continued to fully price in two ECB rate hikes starting in June, while the Fed is expected to keep rates unchanged throughout 2026. CaixaBank Research The policy divergence between the ECB tightening and the Fed on hold reflects the different inflation and energy exposure profiles across the Atlantic. Bitcoin reached an intraday high of $78,268 by April 18 as the reopening of the Strait of Hormuz deflated the geopolitical risk premium.
Market Movers & Shakers
The week's dispersion was sharp. Volatility-driven trading desks at Goldman and JPMorgan delivered record or near-record quarters. Software stocks began recovering after weeks of AI-disruption selling. Netflix beat on revenue but missed Q2 guidance — a reminder that even strong businesses face a valuation reset when growth expectations slip. The buy signals this week are transitional: from energy and financials into industrials and tech as the conflict risk premium deflates.
One Insight
With stock prices back to where they were in January and analysts' expectations for upcoming profits only rising since then, optimists say many stocks look less expensive than they did a few months ago. PBS That argument is not wrong on its face — but it rests on a resolution to the energy crisis that is not yet confirmed. The IMF's Global Financial Stability Report noted that the conflict has alternated between escalation and de-escalation, generating bouts of volatility, but not the kind of sustained drawdowns seen in previous liquidity crises. Banks remain well-capitalised, central clearing has improved, and the financial system has been resilient. International Monetary Fund
The more important question is whether the record-high equity market has correctly priced the post-conflict world or prematurely assumed it. The IMF's base case — a limited, short-lived conflict — still projects global growth slowing to 3.1% and inflation ticking up before declining in 2027. Downside risks remain dominant International Monetary Fund, and a Fed that cannot cut into a 3.5%+ headline inflation environment offers less of a safety net than markets appear to be pricing. The rally has been real. Whether it is durable depends on a diplomatic outcome that has reversed itself multiple times in the past seven days.
What We’re Watching (next 7–14 days)
Strait of Hormuz transit data: Iran closed the Strait again on April 18 in response to the US naval blockade. Wikipedia Daily tanker flow numbers are now the single most-watched data point in global markets.
US-Iran peace talks: Trump has said talks between the US and Iran will resume in Pakistan on Monday. CNBC Any substantive progress would likely trigger another sharp move in oil and equities.
Tech megacap earnings: Microsoft, Alphabet, Meta, and Amazon all report the following week — the most consequential earnings cluster of the year for AI capital flow signals.
US consumer sentiment: The final April University of Michigan survey will be the first consumer confidence read fully capturing the conflict's impact on household confidence and spending intentions.
Next week's major earnings:
UnitedHealth Group and GE Aerospace report on Tuesday, April 21. Boeing, Tesla, IBM, Texas Instruments, and ServiceNow report on Wednesday, April 22. American Express, Honeywell, Union Pacific, Lockheed Martin, Blackstone, and Intel report on Thursday, April 23. Charles Schwab Tesla is the week's headline event — the first of the Magnificent Seven to report and a bellwether for AI infrastructure spending ambition and EV demand recovery.
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