Chapter 1: What recent geopolitical events are influencing the stock market?
Brian Stewart, welcome back to another week of Wall Street Roundup.
Great to be here.
What are you thinking about these days as Tax Day approaches?
Tax Day is coming up. I think Iran is probably top of the mind or Iran, I suppose, depending on where you're brought up. So this week we saw the ceasefire be agreed to. With that, we saw a rally in chip and AI stocks, basically a relief rally risk back on kind of thing. So we saw Intel up about 22%. We saw Micron up about 13%. This is over the last five days. Broadcom up about 20%.
If you look at the XLK, which is the broad tech etf um that was up three percent on wednesday when the um the ceasefire was announced that's the third biggest one day gain of 2026. um one of the only days that was a higher jump for that was on march 31st which was also a rally on peace hopes so you see the market very tied to what's going on um in the geopolitical space um you know if you
keep up. It's tough because different headlines come out all the time. I think the most common characterization of the ceasefire is fragile. There's a lot to be decided. The Strait of Hormuz is still closed. There's still um, conflict between, um, Hezbollah and Israel, which kind of threatens to, uh, break the peace.
So, um, remains to be seen what's going to happen, but for this week anyway, uh, the market is, um, taking a positive outlook, um, that we're taking steps forward towards, towards peace.
Yes. Amen to that. I know I'm always plugging investing experts at some point during these conversations, but I am not doing it mindlessly. There is value to be had, I believe, and many others, too. Just a slew of episodes this week about the tech space and how to think about that, because I think there is...
A lot to parse through over there as we've seen these volatile jumps and slumps in that sector. Speaking of which, oil sector next? Oil stocks?
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Chapter 2: How have chip and AI stocks reacted to the ceasefire news?
Yeah, I mean, that's the other side of the trade, right? So you saw tech up as the kind of risk on trade comes back and you saw oil drop. prices down and then the oil stocks down as well. So ExxonMobil was down about 5% over the past week. You see Chevron down about 6%. However, you have to kind of put that in context. ExxonMobil is still up 54% over the past year.
I think it's up a little bit more than 20% for the year to date um chevron showing a similar pattern up 41 over the past year uh crude oil dropped uh 15 on wednesday with the ceasefire coming out a little bit more than that um but it's still trading around 98 um it was at roughly 57 um as we started the year so um still up about 70 percent year to date.
So we're far from returning to where normal was as we started the year. We had the inflation data come out today. The CPI came out. It showed a significant rise in energy prices. Energy prices were up about 11% from February to March, and that was thanks to about a 21% increase in gasoline prices. But overall, the inflation data was high, but not enough to really sour the market.
So on a headline basis, CPI was up about 3.3% from last year. If we look at the core, it was up 2.6%. 3.3%, even with all the higher energy prices, isn't that far off of what we've been seeing lately anyway. 2.6% is sort of in the comfortable range. I mean, it's still above the 2% Fed target, but the market has sort of gotten used to things in more of the 2.5%, 2.6% range.
So I think it's just in line with the kind of inflation that we've been seeing lately. So elevated, but not... um you know panic inducing so the market kind of took that in stride if we if we look kind of bigger picture of the the fed pretty much locked in um at this point that we're going to get no change in april um
market trading is showing a 98% chance that we'll get no change, with a very fractional chance that there'd be higher rates in April. If you look to the end of the year, there's about a 70% chance of no change. That includes a 1% chance of higher rates and a 29% of lower rates. Just to put that in context, about a week ago, so before the ceasefire, before the latest
Inflation data, there was an 80% chance of no change, including a 7% chance of higher rates. So basically what you're seeing is people starting to believe again in the possibility that sometime during 2026 we're going to lower rates. It's still a minority kind of position at this point, but it is, you know, a meaningful opportunity.
a meaningful probability now when before there was shadings towards maybe being higher rates later. So you're seeing the market starting to get kind of a more optimistic view of how things might play out over the rest of the year, but obviously we're very headline driven. We've got PPI coming out next week. See whether that confirms the CPI report.
We have the ongoing conversations in the Middle East, so we'll see how those turn out. So right now the market's sort of taking things in stride, but there's always headline risk going forward. The latest jobs data came out last week, came out on the market holiday, so you and I didn't get to talk about it, but it was a pretty good report. The payrolls were up more than expected.
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Chapter 3: What is the current state of oil prices and their impact on the market?
You know, there's a certain amount of enthusiasm headed into it. Some of these stocks, like the two that I think are most interesting, and really I'm only saying that because they've been up so much over the past year, is Citi and Goldman Sachs. So Goldman Sachs is up about 84%. In the past year, Citi has basically doubled over the past year. So, I mean, these are...
well-trodden, established, giant financials. So kind of boring companies in a boring business, but they're basically doubling over the past year. So I think it's interesting to see whether that momentum can continue. Um, so it'd be interesting to sort of see how the earnings play into that kind of longer, um, stretch of, of gains.
Um, I also just think economically speaking, um, getting commentary from management, you know, the CEOs of these companies, cause they're really at the pulse of, you know, money changing hands. So, um, whatever they have to say about the economy will be really useful. And then besides the financials, I think the most interesting stock, um, is Netflix. Um, so Netflix, um,
jumped when it lost the bidding war for Warner Brothers. Paramount came in and swooped that away. The stock was kind of under an overhang from that potential merger.
So it'll be interesting to see management's commentary about the thought process behind the merger, how they feel about things moving forward without it, you know, whether there's signs that they're going to look around for other content to buy or things like that. Project Hail Mary is sort of the big, first big movie of 2026. It's a Amazon MGM project.
release i think amazon's had a lot of success with that mgm merger so far sort of you know being able to to boost its content offerings and and be a bigger player in the the box office world so i think that was kind of the vision that netflix had um with the warner brothers uh purchase was kind of going in that direction as well so it'll be interesting to see what the
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