(April 9): US stocks slipped on Thursday, paring the previous session’s sharp rally as skepticism over the US-Iran ceasefire crept back into markets and geopolitical risks remained elevated.
The S&P 500 Index fell 0.1% at 9:45am in New York while the Nasdaq 100 was little changed. The Cboe Volatility Index hovered around 21.
On the economic front, US consumer spending barely rose in February against a backdrop of persistent inflation that’s set to accelerate due to the Iran war. Recurring applications for US jobless benefits fell to the lowest level in almost two years, adding to evidence of stabilisation in the labour market.
Souring sentiment across equities underscores a broader reassessment after Wednesday’s relief rally, which was driven by optimism around the US-Iran deal for a two-week ceasefire. Renewed tensions are weighing on investors as Tehran warned that elements of the ceasefire had been breached, while disagreements over whether the truce extends to Lebanon have emerged as a key flashpoint. President Donald Trump has also vowed to keep US troops in the Persian Gulf ahead of talks with Iran that are planned to firm up the fragile truce.
Amid signs the Strait of Hormuz remains effectively closed, oil prices rebounded to around US$98 a barrel.
“If the direction of travel is higher oil prices for longer because hopes for opening the Strait don’t materialise, then stocks will face more durable headwinds,” said Kevin Brocks, a director at 22V Research. “If the Strait does open, we are only looking at around 5% upside from here,” he added. “If oil prices rise again, US$80-US$120 is an inflation problem and series of potential supply chain shocks, but no real recession risk. With oil above US$120, recession risk starts to climb.”
See also: Stocks gain as US-Iran truce deal spurs oil plunge
Wednesday’s equities surge that propelled the S&P 500 to its highest level since early March was largely fuelled by short covering rather than fresh bullish positioning. However, Goldman Sachs Group Inc’s trading desk pointed out that at the end of the session, the hedge fund community “finished better-for-sale, which is notable and suggests some ongoing scepticism.”
Long-only investors were buyers on Wednesday with flows significantly driven by demand across US mega cap tech names, Goldman’s data shows. The bank’s TMT Momentum Pair trade basket saw its best one-day move on record Wednesday. The basket consists of memory, semiconductor and optical stocks on the long side, and software stocks on the short side. Similarly, Goldman’s long software versus short semiconductors basket had its worst one-day move on record.
Notably, retail investors stayed on the sidelines of Wednesday’s rally. By the close, individual traders finished with their weakest ETF exposure in more than 10 months, according to data from JPMorgan Securities’ Arun Jain. “Retail moved from ‘buying the dip’ (eg this time last year), to now skipping the dips, selling into rallies, and positioning more defensively,” Jain wrote.
See also: US stocks rally on ceasefire, Goldman warns of short squeeze
Investors are now turning their focus to both macro data and corporate fundamentals. CPI data on Friday is expected to start reflecting early impacts from the Middle East conflict. Earnings season kicks off next week, providing a clearer look at how companies are navigating higher input costs and geopolitical disruption.
Among single stock movers, CoreWeave Inc shares moved after the cloud-computing provider reported an expanded long-term agreement with Meta to provide AI cloud capacity through December 2032 for about US$21 billion ($26.8 billion). Chevron Corp said its production fell as much as 6% in the first quarter due in part to the Iran war, echoing a similar disclosure from arch rival Exxon Mobil Corp earlier this week.
Marvell Technology Inc rose after Barclays upgraded the stock to overweight from equal-weight, citing demand for optical products. Nvidia Corp’s most recent rally broke the stock out of its narrow trading range, which market technicians see as a bullish signal. Analysts are positive on Meta Platforms’ latest artificial intelligence model, with Citi saying the launch removes a “key overhang” after expectations of a delayed release. The social media giant’s shares rallied 6.5% on Wednesday.
In the IPO space, Seven & i Holdings Co will delay the planned listing of its US convenience-store business, saying it needs more time to turn the business around amid uncertain market conditions.
Uploaded by Magessan Varatharaja
