US stocks split at the opening bell on Monday as investors assessed a report that Iran has put forward a proposal to reopen the Strait of Hormuz and Microsoft said its exclusive partnership with OpenIA was ending.
The Dow Jones Industrial Average (^DJI) led early trading, picking up roughly 0.1%. Meanwhile, the S&P 500 (^GSPC) slipped less than 0.1% below the flatline and and the Nasdaq Composite (^IXIC) dropped roughly 0.2% after closing out last week at record highs.
Iran has put forward a new proposal to lift its blockade of the key Hormuz waterway and end the war, but would push nuclear negotiations to a later date, Axios reported — even as Tehran’s nuclear program remains a red line for the White House.
Fears over inflationary pressures have buffeted markets, given restrictions on global oil and other supply flows threatens to push up prices across a wide range of industries. Traffic through the critical Strait of Hormuz remained near zero Monday morning, according to Bloomberg oil strategists.
Crude prices leaned higher, Brent crude futures (BZ=F) holding above $100 a barrel, and West Texas Intermediate (CL=F) topping $95 at last check.
Markets now turn to a pivotal stretch on the calendar. Quarterly results from most of the “Magnificent Seven” megacaps are due this week, and their earnings performance could test the resilience shown by stocks amid the Iran war.
Microsoft shares took a turn lower on Monday ahead of the earnings slate after the company said it would no longer maintain exclusive access to OpenAI’s, also announcing an end to a revenue-sharing agreement between the two tech firms.
This week also brings a policy decision from the Federal Reserve, where the committee is largely expected to hold rates steady at a target range of 3.5% to 3.75%.
The meeting is expected to be the penultimate one chaired by Jerome Powell before leadership transitions to Kevin Warsh after Department of Justice on Friday announced it is dropping its criminal investigation into Powell, clearing the way for a crucial vote to confirm Warsh in the Senate Banking Committee.
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Oil prices ticked up Monday morning as diplomatic progress between the US and Iran remained elusive and the two sides’ dual blockade kept shipping traffic through the Strait of Hormuz near zero.
Futures on Brent crude (BZ=F), the international benchmark, gained 1.9% on the session to hold above the key $100 per barrel mark, while those on US benchmark West Texas Intermediate (WTI) crude (CL=F) notched a similar jump to trade above $96 per barrel.
Iran has reportedly offered Washington a new off-ramp to the conflict, Axios reported Monday morning, with a proposal to extend the current ceasefire between the two sides and reopen the Strait of Hormuz while pushing negotiations over Iran’s nuclear program to a later date.
However, Iran’s nuclear program has remained a key red line for the Trump administration, which is looking for a near-complete dismantling of Tehran’s uranium enrichment capabilities and a surrender of the country’s current stores of nuclear material.
Progress forward on potential second-round negotiations between Washington and Tehran fell apart over the weekend after the White House canceled a trip to Pakistan for Vice President JD Vance, special envoy Steve Witkoff, and the president’s son-in-law Jared Kushner, the trio that has been leading talks for the US.
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United Airlines (UAL) CEO Scott Kirby said Monday that talks about a potential merger with American Airlines (AAL) had ended, writing in a public statement that “without a willing partner, something this big simply can’t get done.”
United fell by less than 1% in premarket trading, while American gained less than 1%.
In a long statement shared by the airline early Monday morning, Kirby confirmed he had approached American Airlines in recent weeks about a potential merger that could create a “truly great airline that customers love.”
Yet American, instead of talking with United, “declined to engage and instead responded by publicly closing the door,” Kirby wrote. Shortly after initial news reports that Kirby was pitching a merger, American Airlines said they were not interested in such a plan.
In comments on American’s first quarter earnings call, CEO Robert Isom said such a plan would be “bad for customers, bad for the industry and ultimately, that would be bad for American Airlines.”
“The idea of the two largest airlines in the world getting together, that is something that we’ve viewed as being anti-competitive and obviously everybody that has weighed in suggests the same thing,” Isom said.
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Traders are all but unanimous in their bets that the Fed will keep any potential rate changes on hold at the April meeting this week — Jerome Powell’s second-to-last as chair.
Yahoo Finance’s Jennifer Schonberger digs into what to expect:
Federal Reserve officials meet this week as the war in the Middle East reaches the two-month mark, creating continued uncertainty about the impact on the economy. It’s likely to keep the central bank holding interest rates where they are.
“There’s still uncertainty about how this war is going to be resolved, and oil prices have been volatile. But they’re still well above where they were before the war started, and so that will eventually have an impact on the economy,” former Cleveland Federal Reserve president Loretta Mester said.
Policymakers are weighing the war’s impact on inflation and growth, waiting to see how severe it will be, depending on how long the war lasts.
Esther George, former president of the Kansas City Federal Reserve, said there’s a sense that the ripple effects will be felt through the summer and into the fall, keeping oil prices higher and impacting supplies.
Read more here.
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Bloomberg reports:
China has decided to block Meta Platforms Inc.’s (META) $2 billion acquisition of agentic AI startup Manus, a surprise move to unwind a controversial deal that’s drawn fire for the leakage of technology to the US.
The National Development and Reform Commission ordered the deal’s cancellation in a brief statement Monday. The decision was made in accordance with laws and regulations, the powerful state planner said in a one-line notice, without elaborating.
The ruling is likely to send a chill through China’s burgeoning AI sector, and emerged weeks before a high-profile summit between US President Donald Trump and China’s Xi Jinping. Beijing has tightened scrutiny of key industry firms in the wake of the deal, which has been largely completed. Initially hailed as a template for startups with global aspirations, critics have since lamented the loss of valuable technology to a geopolitical rival.
Read more here.
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Bloomberg reports:
Goldman Sachs Group Inc. lifted oil-price forecasts as the prolonged closure of the Strait of Hormuz spurs “extreme” inventory draws.
Brent is set to average $90 a barrel in the fourth quarter, up from a previous outlook for $80, analysts including Daan Struyven and Yulia Zhestkova Grigsby said in an April 27 note. The figure for that period is now “nearly $30 higher than before the Hormuz shock,” they said, adding to recent revisions.
“We estimate that 14.5 million barrels a day of Persian Gulf crude production losses are driving global oil inventories to draw at a record 11 to 12 million barrel-a-day pace in April,” they said. Given that such “extreme inventory draws are not sustainable, even sharper demand losses could be required if the supply shock persists longer,” they added.
Read more here.