The S&P 500 slipped 0.2% on Tuesday as oil prices edged higher ahead of a Wednesday deadline for a U.S.-Iran ceasefire agreement, with investors balancing strong corporate earnings against rising geopolitical tension.
West Texas Intermediate crude futures rose 3% to above $93 per barrel, while Brent crude advanced 2% to trade above $97 a barrel, reversing recent declines as markets anticipated a potential deal. The increase came despite a brief weekend uptick in commercial ship traffic through the Strait of Hormuz that later slowed following renewed vessel attacks, underscoring the fragility of supply chain confidence.
President Donald Trump told CNBC he expects a “great deal” with Iran but warned the U.S. Military is “ready” to bomb Tehran if no agreement is signed by the ceasefire deadline, adding he does not want to extend it. His remarks followed a Truth Social post earlier Tuesday accusing Iran of violating the ceasefire “numerous times.”
Despite the oil-driven pressure on equities, corporate earnings provided a counterweight. UnitedHealth Group’s first-quarter results surpassed expectations, sending shares up more than 8% and prompting the company to raise its full-year 2026 profit outlook. Quest Diagnostics as well beat forecasts and raised its guidance, climbing 4.2%, helping offset an 8.3% drop in Tractor Supply after disappointing quarterly results.
The Nasdaq Composite hovered near flatline, ending its 13-day winning streak — the longest since 1992 — while the Dow Jones Industrial Average lost 33 points, or 0.1%. In the prior week, the S&P 500 had notched multiple all-time intraday and closing highs, finishing above 7,100 for the first time ever on hopes for a near-term resolution to the Iran conflict.
Brian Mulberry, chief market strategist at Zacks Investment Management, said confidence in normalization of traffic through the Strait of Hormuz would eventually stabilize commodity prices, adding he expects control of the waterway to be resolved by week’s end. He emphasized that the strong Q1 earnings performance — anticipating double-digit growth — should not be overlooked amid the geopolitical noise.
Analysts note the market’s resilience reflects broader sector strength beyond mega-cap tech. The large-cap technology ETF XLK is poised to extend its win streak to a record-breaking 15 straight sessions, while the small-cap tech ETF PSCT achieved its seventh consecutive intraday record high. Semiconductors, represented by SOXX, are on a record-tying 15-session win streak, and the Dow Jones Transportation Average has posted eight intraday record highs in the last 10 sessions.
Brian Jacobsen, chief economic strategist at Annex Wealth Management, observed that while it has become a cliché to say the economic impact of the Middle East conflict depends on its duration, the current market behavior confirms the adage holds true. Retail sales data showed U.S. Retailers made more money in March — the first full month of the war — than analysts expected, with growth stable when excluding gasoline stations.
Both the U.S. And Iran continue to talk tough, but hope persists after each signaled willingness to hold a new round of ceasefire talks in Pakistan. Oil prices remain sensitive to any shift in diplomatic tone, with Brent crude at $96.72 ahead of Wednesday’s expiration, up 1.3% on the day.
Why did oil prices rise despite hopes for a ceasefire deal?
Oil prices increased as traders priced in the risk of supply disruption should the ceasefire collapse, particularly given recent vessel attacks in the Strait of Hormuz that have already slowed commercial traffic, even amid diplomatic optimism.
How are strong earnings affecting the market’s reaction to geopolitical risk?
Better-than-expected profits from companies like UnitedHealth and Quest Diagnostics are providing a buffer against oil-driven volatility, reinforcing the view that corporate fundamentals can outweigh short-term geopolitical swings in determining equity trends.
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