Stock Market Update

Equity futures point to a lower opening this morning after an escalation in geopolitical tensions between the U.S. and Iran over the weekend. The major averages are coming off their third consecutive week of gains of 3% or wider across the board, with the S&P 500 and Nasdaq Composite notching fresh record highs and the Nasdaq Composite recording 13 straight winning sessions.

Stocks are poised to take a step back at the open after Iran has put a pause on the next round of peace talks that were set to take place before the ceasefire expires on Wednesday. NBC News reported Iran has vowed retaliation after the U.S. seized an Iranian cargo ship, with President Trump issuing renewed threats against the country's energy infrastructure.

Crude oil is currently up $4.93 (+6.0%) to $87.52 per barrel.

Still, the broader undertone remains constructive for stocks as recent decreases to the price of oil have improved the market's rate cut odds, while mega-cap and tech stocks have continued to provide steady leadership alongside signs of improving market breadth. That said, today's pullback looks more like a pause following an extended rally rather than the start of a deeper reversal, as investors weigh elevated geopolitical risks against a still-supportive macro backdrop.

On the earnings front, a slate of regional banks will report today before earnings ramp up considerably tomorrow.

There is no economic data of note scheduled for today to kick off a week of relatively few data releases.

In corporate news:

• American Airlines (AAL 12.36, -0.42, -3.3%) is down in the premarket after the company rejected merger talks with United Airlines (UAL 99.11, -2.69, -2.6%), according to CNBC.
• Alphabet (GOOG 336.52, -2.88, -0.9%) is in discussions with Marvell (MRVL 147.82 +8.31, +5.8%) to construct new artificial intelligence chips, according to The Information.
• Meta Platforms (META 682.47, -6.08, -0.9%) plans to reduce its workforce by roughly 8,000, according to Reuters.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region began the week on a higher note even though the conflict with Iran escalated over the weekend, as Iran's navy continued restricting traffic through the Strait of Hormuz over the weekend. Japan's Nikkei: +0.6%, Hong Kong's Hang Seng: +0.8%, China's Shanghai Composite: +0.8%, India's Sensex: UNCH, South Korea's Kospi: +0.4%, Australia's ASX All Ordinaries: +0.1%.

In news:

• A U.S. delegation was expected to meet with Iranian officials in Pakistan today, but Iran has not committed to another round of negotiations yet.
• Tokyo Steel announced that its price hikes will continue into May while other Japanese companies are also expected to increase prices.
• The approval rating of Prime Minister Takaichi's cabinet fell to 66% from 71%.
• The People's Bank of China left its one-year and five-year loan prime rates at their respective 3.00% and 3.50%.

In economic data:

• Japan's February Tertiary Industry Activity Index -0.7 (last -8.7)
• New Zealand's March trade surplus NZD698 mln (expected surplus of NZD175 mln; last deficit of NZD365 mln)

Major European indices trade in the red, weighed down by news that maritime traffic is still not flowing through the Strait of Hormuz. STOXX Europe 600: -1.1%, Germany's DAX: -1.3%, U.K.'s FTSE 100: -0.7%, France's CAC 40: -1.1%, Italy's FTSE MIB: -1.4%, Spain's IBEX 35: -1.3%.

In news:

• European Central Bank policymaker Demarco said that the central bank should wait a bit longer before raising rates, adding that bets on two rate hikes are not unreasonable.
• Moody's lowered Belgium's rating to A1 from Aa3, revising the outlook to Stable from Negative while DBRS reaffirmed Italy's A rating with a Stable trend.

In economic data:

• Eurozone's February Construction Output -1.9% m/m (last -1.33%)
• Germany's March PPI 2.5% m/m (expected 1.4%; last -0.5%); -0.2% yr/yr (last -3.3%)