Hormuz Strait remains deadlocked, oil prices surging, with Tesla and other giants' financial reports coming this week, can the market continue to ignore the "war noise" model?

Despite the headlines of peace talks between the United States and Iran fluctuating over the past week, two of the three major US stock indices hit historical highs, with all three recording gains for the third consecutive week. Data shows that the S&P 500 index rose 1.2% on Friday, recording a weekly gain of 4.5%; the tech-heavy Nasdaq index rose 1.5% on Friday, recording a weekly gain of 6.8%; the Dow Jones index was the only major index last week that did not hit a historical high, rising 1.8% on Friday and recording a weekly gain of 3.2%. Strait of Hormuz opens and closes! Middle East tensions escalate again On Friday, the US stock market continued its upward trend, mainly due to Iran announcing the opening of the Strait of Hormuz. US President Trump expressed his thanks, but also warned that the US naval blockade against Iran would remain effective. In less than 24 hours, Iran's attitude reversed, announcing that it would resume control of this global energy transportation chokepoint. According to British sources, shipping in the Strait of Hormuz came to a standstill again on the evening of April 18th. Prior to that, radio communications had warned that Iranian armed forces had resumed their strict control and management of the strait. The Iranian Islamic Revolutionary Guard Corps Navy Public Relations Department stated on the evening of April 18th that the day before, multiple ships had passed through the Strait of Hormuz under the coordination and command of the Iranian Islamic Revolutionary Guard Corps Navy. However, due to the US violating the ceasefire agreement and failing to lift the blockade on Iranian ships and ports, the Strait of Hormuz would be closed that night until the blockade was lifted. Iran warned that all ships in the Persian Gulf and the Sea of Oman were not allowed to leave their harbors, and any ship approaching the Strait of Hormuz would be considered as cooperating with the enemy, with violating ships becoming targets. The statement also notified all ships and their owners to only obtain information through official channels from Iran, deeming Trump's statements regarding the Strait of Hormuz and the Persian Gulf as lacking credibility. On the same day, the British maritime security company Vanguard Technologies released a report revealing details of a ship attack near the Strait of Hormuz involving an oil tanker, a cruise ship, and a container ship. Two ships were explicitly warned and fired upon by the Iranian Islamic Revolutionary Guard Corps, while another container ship was hit by unidentified projectiles about 25 nautical miles northeast of Oman, causing damage to some containers. The Secretariat of the Iranian National Security Council issued a statement on the latest progress in negotiations with the US, stating that Iran is determined to monitor and control the traffic in the Strait of Hormuz until the complete end of the war and the achievement of lasting peace in the region. On April 18th, US officials announced that the US military plans to board and seize oil tankers and merchant ships related to Iran in international waters in the coming days, expanding its naval combat operations beyond the Middle East. On April 19th, the US Central Command posted on social media that a US missile destroyer intercepted an Iranian cargo ship in the northern Arabian Sea preparing to head to the Iranian port of Abbas, firing on its engine room with ship cannons, rendering it immobile. US Marines subsequently boarded and took control of the cargo ship. Early on April 20th, a spokesperson for the Iranian Armed Forces Headquarters in Hatam Anbia reported that the US military had attacked an Iranian container ship in the waters of the Gulf of Oman on the 19th, prompting the Iranian Armed Forces to launch multiple drones, targeting several US military ships. Additionally, the two-week ceasefire agreement between the US and Iran is set to expire on April 22nd. Reports on the negotiations between the two sides are "diverse". American media reports suggest that an extension of the ceasefire will be jointly announced by the US and Iran on April 22nd; following that, if negotiations go smoothly, Trump will travel to Islamabad to meet with Iranian President Pezeshian, and the two may sign the "Islamabad Declaration" aimed at a ceasefire. Earlier reports also indicated that an Iranian delegation would arrive in Islamabad, Pakistan on the 21st, with members including the Speaker of the Iranian Islamic Parliament, Kalibaf, and Foreign Minister Alaghazi. On the Iranian side, reports claim that the news of the second round of talks between the US and Iran in Islamabad is not accurate. It is stated that Iran refuses to participate in the second round of talks with the US, citing excessive demands, unrealistic expectations, changing positions, ongoing blockade threats against Iran, and threatening rhetoric as hindrances to progress in negotiations. In this scenario, the prospects for successful negotiations are unclear. Furthermore, given recent US military movements such as ship deployments, weapon shipments, reconnaissance flights, and air defense deployments, Iran has concluded that the situation could evolve in two possible directions and has taken necessary measures. The first possibility is that the US intends to create psychological pressure through these military preparations to gain leverage at the negotiating table. The second possibility is that the US plans to conduct a surprise attack under the cover of negotiation rhetoric and deception. Iran believes that the likelihood of renewed hostilities is higher than the continuation of negotiations, and has prepared accordingly. After a chaotic weekend, the Middle East situation has once again escalated after a recent period of cooling down. As markets open on Monday, Brent crude oil prices surged by 7.9%, nearly erasing most of the losses from Friday. Despite the ongoing uncertainty surrounding the Middle East conflict, US investors have chosen to treat headlines about the situation as mere noise and have once again embraced US stocks, especially tech stocks, as strong earnings reports come in. Energy consulting firm Rystad Energy's deputy analysis director, Artam Abramov, stated, "Any credible sign of the Strait of Hormuz reopening, even temporarily, will have a significant impact on the market." However, experts warn that even if the US and Iran sign a final and binding peace agreement this week and reopen the strait, the oil market may still take several weeks or months to fully recover. Currently, hundreds of ships are stranded in the Persian Gulf, and according to Rystad Energy, oil production in the Middle East region has decreased by approximately 1.24 million barrels per day, with recovery efforts taking time. The US stock market is in "attack mode"! A flurry of earnings reports this week- Can investors continue to ignore "war noise"? In the coming week, investors will face a flurry of earnings reports. Tesla, Inc. and Intel Corporation will announce their earnings on Wednesday and Thursday, respectively, leading this busy earnings week. Intel Corporation saw its stock price reach its highest level since 2000 during trading last Friday. The earnings reports of Alaska Air Group, Inc. and United Airlines will provide insights into the impact of rising aviation fuel prices. And, GE Vernova's performance will serve as an indicator of AI and power infrastructure demand. For Tesla, Inc., the focus of its upcoming first quarter earnings report will be on the latest developments in its chip manufacturing ambitions for its car and Siasun Robot & Automation businesses. Elon Musk announced last Wednesday that Tesla, Inc.'s AI5 chip has successfully taped out, designed for future electric vehicles, large training clusters, and the Optimus Siasun Robot & Automation. Reports indicate that the company is recruiting chip engineers in Taiwan where it plans to produce its chips. While Tesla, Inc. has plans to produce its own chips internally in its upcoming Terafab chip plant, analysts and experts believe that establishing its own wafer fab plant will be a huge engineering challenge. This raises the question - Can Tesla, Inc., a company seemingly focused on electric cars, convince investors that it can be a leader in the Siasun Robot & Automation and AI fields. UBS Group AG analyst Joseph Spak noted, "Tesla, Inc.'s stock price is more dependent on emotion, narrative, and momentum trading than fundamentals." In a recent report, the analyst stated that Tesla, Inc. still needs to overcome several challenges before announcing first quarter earnings. However, this does not mean that its vision for Siasun Robot & Automation lacks a solid foundation. The analyst added, "We believe that concerns about weak electric vehicle demand, first-quarter 2026 energy business shortfall, rising costs, increased capital expenditure needs, and slow progress in robotaxi and Optimus have suppressed stock performance. However, we still expect progress with robotaxi and Optimus, and continue to believe that Tesla, Inc. is one of the leaders in physical AI." Economic data releases this week are relatively calm. Retail sales data on Tuesday and the University of Michigan consumer sentiment index on Friday will be the highlights of this week's economic data. These indicators are expected to provide insights into consumer conditions - the Middle East conflict has lasted for eight weeks, disrupting the global economy, driving up prices, and intensifying uncertainty. The University of Michigan consumer sentiment survey in early April had dropped to a historic low of 47.6, making this indicator particularly important. While the temporary ceasefire agreement between the US and Iran appears to be holding as it approaches expiration on Tuesday, there is still no clear sign of the war coming to an end. However, the US stock market seems undeterred, with the S&P 500 index and the Nasdaq Composite index hitting new highs, proving that investors are once again treating headlines about the war as mere noise and focusing on the strong earnings reports coming in, particularly from tech stocks. HSBC's chief stock strategist mentioned in a client report last Thursday that the rise in tech stocks was not without reason. Investors expect "although market uncertainty has increased, the first-quarter earnings season will be strong," with the most optimism directed towards tech stocks. The market anticipates that profits of the "Big Seven" will grow by 20%, while profits for the remaining 493 stocks in the S&P 500 will increase by 12%. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR reported first-quarter results that far exceeded expectations - adjusted earnings per share increased by 66% year-over-year, and revenue increased by 40%. This served as another strong signal. LPL Financial's chief technical strategist stated, "The 'offensive' is entering the field. Risk appetite has returned, and early cyclical rotation pressure is building under the surface of the market." However, the strategist cautioned that while market momentum has recovered widely, actual progress in the US-Iran situation is needed to sustain this momentum. Macquarie strategists also stated, "For continuous support of the uptrend, signs of actual concessions from the US or Iran are needed soon." It is worth noting that the large tech engine that has driven the US stock market up for the past decade has once again started. Following a drop to its lowest level since July 2025 before the Middle East war, the ETF tracking the "Big Seven" stocks rose by 9% in the past five trading days, approaching its historical high. Jefferies Financial Group Inc. analyst Michael Toomey, on the other hand, believes that the tech sector may be nearing the end of this current uptrend. He stated, "While most of the normalization trends we see are healthy from a fundamental perspective, I believe this rally has been fully priced in (even overpriced). From a tactical perspective, the market may enter a consolidation phase in the short term." The resilience of corporate earnings is an important cornerstone! Wall Street bullish on US stocks Despite the uncertainty surrounding Federal Reserve policy, several Wall Street institutions have been "loudly proclaiming" the prospects for US stocks, looking forward to a new bull market led by tech stocks underpinned by strong corporate earnings. Tom Lee, a seasoned stock market strategist and co-founder of Fundstrat, often referred to as the "Wall Street oracle", believes that the current position of the US stock market and even global stock markets is stronger than when they hit the last historical high earlier this year. Tom Lee shares the view of a typical judgment by Wall Street giant J.P. Morgan, that the tech sector focused on AI computational infrastructure will lead the next phase of the stock market's super bull market. Citigroup has upgraded its rating on US stocks from "neutral" to "overweight", expecting the S&P 500 index to reach 7,700 points by the end of the year. The bank's latest research note shows that the tech sector, previously suppressed by political conflicts, valuation anxieties, and high expectations, is entering a window of revaluation driven by a restoration of risk appetite shifting to a reassessment of fundamentals. Following a marginal cooling off of Middle East tensions, markets have quickly shifted back to risk assets, with the S&P 500 and Nasdaq rising together, indicating that funds have started trading not based on "current panic" but on the "future overall profit growth trajectory under AI-driven concepts". In this framework, tech stocks, especially large tech platforms, are no longer just liquidity-driven hoarding objects but are re-establishing themselves as the core anchor of US stock risk appetite and profit expectations. BlackRock, Inc.'s stock strategist has once again shifted to "overweight" on US stocks. The emphasis has been on the new round of earnings reports, rallying around the engine of profit growth that can support the main theme of the US stock bull market. The strategist wrote, "Even during the political conflict with GEO Group Inc, profit expectations continued to rise, mostly due to the strong demand for AI-related investment themes." In conclusion, the narrative of the new round of the US stock bull market is fundamentally supported by three main pillars: the resilience of corporate earnings revealed during the latest earnings season, the resurgence of risk appetite led by the tech/AI computational power theme, and the market's judgment that the impact of the Middle East conflict will not evolve into a long-term inflation akin to that of 2022. As long as these three logical pillars remain intact, with the backdrop of easing Middle East tensions, the US stock market is expected to continue its upward trajectory. However, some institutions warn that the market may be underestimating risks at the moment. While investors broadly expect the war to gradually ease or selectively ignore war noise, disruptions to supply chains, energy infrastructure, and inflation expectations have had a substantive impact and will take time to fully repair in the short term. Some investment institutions point out that the market may be seeing the situation as already resolved, but potential vulnerabilities still exist.