We start a new trading week with Friday’s hopefulness about fruitful peace talks with Iran hitting the rocks this morning. A scheduled meeting in Islamabad this week between the two warring factions is now off, following the weekend seizure of an Iranian oil vessel attempting to broach the U.S. blockade outside the Strait of Hormuz.
Peace talks are obviously key to getting the Strait opened again, and the longer it remains closed, the more global supply is choked off and all oil-based products — not just gasoline — will come with even-higher price tags. Iran’s strategy all along has been to attack the economies of the West, while a vast array of approaches have thus far been employed by the Trump administration.
Analysts are considering the near-term timeline currently: the cease-fire reached between the U.S. and Iran is due to expire tomorrow night, and with animosities apparently climbing again, it remains to be seen if another extension can be wrangled. As a result, pre-market futures are weaker this morning: the Dow is -225 points, -0.45%, the S&P 500 is -31, -0.44%, the Nasdaq -113 points, -0.42% and the small-cap Russell 2000 is -22 points, -0.81%.
Economic Reports Expected This Week
Aside from the ongoing real-life saga in the Middle East, we have plenty of other grist for the mill this week: Tuesday brings us Retail Sales and Pending Home Sales results for March, and Business Inventories for February. Thursday has Weekly Jobless Claims and S&P flash PMI in Services and Manufacturing for April, and Friday is April Consumer Sentiment results.
While important, these metrics are unlikely to move the needle in terms of equity-market conduct this week, especially relative to developments in and around Iran. We’re still a week and a half away from the Fed’s preferred gauge of inflation, Personal Consumption Expenditures (PCE), which happens to come a day after what will likely be the final Federal Open Market Committee (FOMC) meeting under the helm of Fed Chair Jerome Powell. And we’ll next see a new “Jobs Week” two weeks from now.
Cleveland-Cliffs Beats Q1 Estimates
American steel producer Cleveland-Cliffs CLF reported better-than-expected results in its Q1 report this morning, with a bottom-line loss of -$0.40 per share coming in 4 cents better than the Zacks consensus. Revenues of $4.92 billion in the quarter was +1.8% ahead of projections, and nicely up from the $4.63 billion reported in the year-ago quarter. Shipments grew +9% in the quarter, but expected energy price headwinds are expected going forward.
Earnings Reports for This Week
A close second-place to Middle East events this week will be the start of peak Q1 earnings season. 3M MMM, Boeing BA, Tesla TSLA and Intel INTC are among the biggest names putting out numbers between now and Friday. Also defense companies like GE Aerospace GE, Lockheed Martin LMT and Northrop Grumman NOC, airlines such as United UAL and American AAL, and many more.
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