Blockade Blues: Stocks Down, Oil Up as Talks Fail

Published as of: April 13, 2026, 9:09 a.m. ET

(Monday market open) Weekend talks ended with no progress toward ending the war or opening the Strait of Hormuz, so crude's overnight spike and war tidings will likely dominate trading as Goldman Sachs (GS) kicks off earnings season. President Trump announced a U.S. blockade of the strait Sunday, sending stocks on a downward spin and threatening last week's healthy index gains. Stocks recovered slightly after Trump clarified the blockade only affects ships into and out of Iranian ports, an important distinction. Still, oil's up nearly 8% and back above $100 per barrel.

The ceasefire expires next week, and a Navy blockade might raise concerns about fresh tension on the high seas. Even if the situation improves, things likely won't go right back to normal for the bruised U.S. economy, though it depends less on oil from the Middle East than it once did. Crude prices everywhere reflect global supply and demand trends. "There's growing concern, both in Washington and among investors, that no matter how quickly the war ends, the economic fallout is likely to last for months," said Michael Townsend, managing director of legislative and regulatory affairs at Schwab.

Stocks closed mixed Friday in a tepid session after the March Consumer Price Index (CPI) rose dramatically due to energy costs. On a positive note that day, the PHLX Semiconductor Index (SOX) set a new all-time high. For the week, the S&P 500 Index rose more than 3%, its best weekly gain since November, as the ceasefire began. "Many questions remain about the ultimate outcome of the war," the Schwab Center for Financial Research (SCFR) noted in its latest look at the conflict and potential market impact. "First, and most immediate, is whether the truce will hold up. A two‑week pause lowers the probability of immediate escalation, but such arrangements can prove fragile, particularly when key strategic issues remain unresolved."

1. Trading and guidance in focus as banks report: Analysts expect strong earnings growth from banks this quarter. The rebounding initial public offering (IPO) market, solid mergers and acquisitions (M&A) activity, resilient net interest income (NII), and strong trading revenues are expected to bolster results. But increased economic uncertainty due to the war and signs of resurgent inflation may lead forward guidance to be more important than first quarter data. Nonetheless, investors will watch trading metrics closely. Goldman Sachs reported this morning that its first quarter equities trading revenue rose 27% year over year, but fixed income trading revenue fell. This metric will also be key for other major Wall Street banks reporting this week, such as JPMorgan Chase (JPM) and Citigroup (C) tomorrow and Morgan Stanley (MS) on Wednesday. Trading revenue was strong in the fourth quarter of last year. JPMorgan Chase, for example, saw its equity trading revenues spike 40% year over year. As far as headwinds, investors will likely be focused on credit quality amid concerns about inflation, private credit, and the labor market.
    
2. Earnings outlook updated: The final pre-earnings season S&P 500 earnings outlook from FactSet on Friday pegged earnings per share growth at 12.6%. Earnings guidance could be cloudy this quarter, with companies unsure what to expect in a volatile geopolitical climate. The outlook could become clearer as companies report, though it's possible some might suspend guidance, as many did during the pandemic and some did after last year's tariff turbulence. Forward earnings estimates have been resilient for months despite the war and rising inflation. Analysts haven't made a lot of adjustments lately, but that could change in coming weeks as they get a better picture of the corporate landscape. Though only one of the three months of the first quarter included war-driven energy inflation, there's concern about consumers, especially after last Friday's dramatic drop in preliminary University of Michigan Consumer Sentiment. "Real" wages are falling when inflation is factored in, and the share of consumers who say their financial situation is worse than a year ago due to rising prices jumped to 54% in April from 47% in March, now the highest on record.
    
3. VIX and that: The Cboe Volatility Index, or VIX, sometimes called the "fear index," remains worth a close watch, rising back above 21 this morning. It fell to its lowest levels since the war began late last week, below its historical average of 20 and down from highs above 30 late last month. Spikes in the VIX could be an early signal of growing market unease related to the Middle East. If VIX rises along with stocks on any given morning, that could suggest the stock rally is fleeting. It's not a perfect indicator, so other things to watch include the momentum-indicating Relative Strength Index, or RSI, for the major indexes, and market breadth. By the end of last week, close to 45% of S&P 500 stocks were above their 50-day moving averages, up from a low of 18% last month. Bullish investors would probably want to see that climb back toward 60% to 70% to send a signal that the rally is lifting a wide variety of stocks and sectors. "In my view, the reason investors have been eager to buy the dip is because S&P EPS growth forecasts have been moving higher over the past couple weeks, the AI secular growth story remains intact, and there's a tendency to compare the Iran war to Trump's Liberation Day tariffs or the Russian invasion of Ukraine, both of which resulted in a market recovery," said Nathan Peterson, director of derivatives research and strategy at SCFR.

• Goldman Sachs fell more than 3.7% despite reporting better-than-expected quarterly earnings. Though overall revenue was solid, trading revenue in Goldman's fixed income, currency, and commodity operations fell short of analysts' estimates. Trading revenue in equities showed firm growth and the investment banking business had a healthy quarter.
   
• Best Buy (BBY) dropped 4.5% in early trading. Goldman Sachs downgraded shares to sell from buy, seeing risk to the company's sales as higher memory prices work their way into the price of laptops and computers. The company also faces margin compression as customers potentially trade down to lower-priced models, the analyst said.
   
• Fastenal (FAST) fell 4% ahead of the opening bell despite announcing earnings and revenue that met Wall Street's expectations for the industrial and construction supply distributor. As Briefing.com notes, Fastenal often sets the tone for earnings from industrial and manufacturing names.
   
• Revolution Medicines (RVMD) soared nearly 38% in early trading, lifted by news of positive results for a Phase 3 trial of its pancreatic cancer drug. The company plans to seek U.S. Food and Drug Administration (FDA) approval soon, CNBC reported.
   
• Energy stocks rose this morning after the Trump administration announced its blockade, which won't affect ships not moving into or out of Iranian ports. ConocoPhillips (COP) climbed 2.4% and Valero Energy (VLO) added 2.1%. It's possible other countries could get Iranian and U.S. negotiators talking again in coming days, Axios reported.
   
• Cruise and airline stocks fell early as energy prices surged.
   
• Chances of a pause in rate changes at this month's Fed meeting slipped to 96% this morning from nearly 100% late last week, according to the CME FedWatch Tool, as traders now see a 3.6% chance of a rate hike. Chances of at least one cut this year are near 20%. "The outlook for rates will largely depend on how the war in the Middle East develops," said Cooper Howard, director of fixed income research and strategy at SCFR.
   
• The March Producer Price Index, or PPI, is due at 8:30 a.m. ET tomorrow. The monthly headline PPI, which looks at wholesale prices, is seen up a sharp 1.2%, according to Briefing.com consensus. Core, which excludes food and energy, is seen at 0.4%.
   
• Treasury yields climbed again early today after slipping slightly last week. "If the war quickly resolves and oil prices move lower, we expect 10-year Treasury yields to move modestly lower," Howard said. "Assuming the situation fizzles out, we would expect the 10-year to remain range bound in the 4% to 4.5% area. If there's a further escalation, the 10-year yield could rise."
   
• With major indexes heading lower today, support for the S&P 500 Index may be at its 200-day moving average at 6,662. "It's possible that the March 30low of 6,316 turns out to be the bottom, but uncertainty is still elevated and it's probably prudent to hold some investment skepticism for now," Peterson said.

Conflict reverberations: While last week demonstrated a "classic relief rally" on news of a temporary truce, rising risks related to war-eroded investor sentiment are causing sustained pressure on risk assets, note Michelle Gibley, director of international equity research and strategy at SCFR, and Chris Ferrarone, head of equity research and strategy at SCFR, in their new analysis. They also revisit possible upside and downside market scenarios from the conflict.

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Stocks and crude oil remain tightly correlated, as this three-month chart shows. Last week, the tech-heavy Nasdaq 100 (NDX—candlesticks) advanced 4.4% as crude oil (/CL—purple line) tumbled 14%. Until the Strait of Hormuz is back to normal, this could continue to be how things go on Wall Street, with stocks tied to crude.