On the weekend, the U.S. negotiators returned from ceasefire discussions with Iran. At first, markets fell by around 1.0%, then held the -0.5% decline. At the end of the day, Nasdaq (QQQ) gained 1.23%.
Investors hunted for bargains. For example, ServiceNow (NOW) gained 7.3% to close at $89.06. Its P/E ratio is 53.35 times. Adobe (ADBE), which has a 13.99x P/E, gained 6.55%. Magnificent 7 names like Microsoft (MSFT) and Alphabet (GOOG) led the strong market breadth. Retail stocks like Walmart (WMT), Costco (COST), and Target (TGT) fell.
Markets are trading volatile software and technology hardware stocks. They are betting that those stocks will climb by more if Iran and the U.S. agree on a ceasefire. Any allowance for ships to cross the Strait of Hormuz would alleviate the oil crisis.
After several weeks of closure, the oil shortage is causing a dramatic increase in inflation. Asian countries are bearing the price hikes first. North America will eventually experience price hikes related to the oil crisis.
Investors held gold (GLD) and energy stocks like Exxon (XOM). But their prices are in a holding pattern. This suggests that markets are not concerned that interest rates will change by much. That would not pressure richly valued stocks in the software or AI chip supply markets to pull back. That might lead to the S&P 500 (IVV) potentially closing above the $700 level in the coming weeks.
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