Stocks Stall as Iran Deal Signals Whipsaw Oil and Risk Appetite

Stocks ended mixed and largely flat Wednesday as traders weighed conflicting signals on U.S.-Iran negotiations and the potential reopening of normal shipping through the Strait of Hormuz. Oil fell sharply on earlier optimism around a draft peace framework, but equities lost momentum after President Trump said he was “not satisfied” with negotiations and U.S. officials denied reports of an interim deal. The Dow reached a new high, while banks and semiconductors lagged and Meta helped support mega-cap tech.

Key Headlines & Market Movers:

Conflicting Iran Signals Drive Oil Lower but Cap Equity Gains: Crude prices dropped after reports suggested a deal could restore normal Strait of Hormuz traffic within a month, but the rally in risk assets faded as U.S. officials pushed back on the report. Trump emphasized that no one country would control the waterway and downplayed sanctions relief, underscoring unresolved sticking points. Markets appear to be pricing in eventual progress, but not a clean or immediate resolution.

• AI and Earnings Momentum Remain Core Bullish Support: Strategists continued to frame the equity rally as earnings-led rather than purely speculative, with AI-related growth still driving optimism. Goldman Sachs raised its year-end S&P 500 target to 8,000, citing earnings growth tied to the AI boom. Meta rallied on plans to sell AI chatbot subscriptions, while chip shares cooled after a strong prior session, showing investors remain selective within the AI trade.

Corporate Updates Show Mixed Sector Signals: Bank executives pointed to another strong quarter for trading revenue, even as bank stocks led broader market losses on the day. Boeing offered a more upbeat production and certification outlook, while American Airlines said travel demand remains firm despite higher fuel costs. Elsewhere, Zscaler sold off sharply on cautious guidance, Bath & Body Works jumped on better profit expectations, and Salesforce traded cautiously ahead of earnings.

S&P 500 Sector Performance

Looking Ahead

Markets will remain highly sensitive to headlines on Iran, the Strait of Hormuz, and oil supply risks, since a durable reopening of energy flows would ease inflation pressure and support risk appetite. Investors will also watch whether AI-linked earnings can keep justifying elevated equity valuations, particularly as semiconductor momentum has become more uneven. Upcoming earnings and macro data will matter most if they shift expectations for profit growth, inflation, or the path of Treasury yields.

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