Wall Street heads into the new week juggling three major forces: a packed earnings calendar, fast-moving geopolitical risks in the Middle East, and a series of macro events that could shape interest rate expectations.
Even after the S&P 500 ended last week at a record high, sentiment is starting to feel more fragile as investors weigh whether the rally can hold up against rising uncertainty.
The biggest wildcard remains tensions around the Strait of Hormuz, a critical global energy chokepoint.
As XTB’s Kathleen Brooks put it, markets have been “jostled by news flow over the weekend,” with shifting reports on whether the waterway is open or blocked and renewed confrontation between the US and Iran. The result has been sharp swings in oil prices and a pullback in equities.
“The situation has deteriorated and once more traffic through the Strait of Hormuz is at a standstill,” Brooks wrote.
“Today’s jump in oil prices and the pullback in stocks is a reminder that the current ceasefire that expires on Wednesday is fragile.”
The key issue for investors energy flows. Any disruption in the Strait of Hormuz has immediate implications for oil prices, inflation expectations, and bond yields.
Deutsche Bank echoed that view, noting that markets are watching closely for any signs of improved energy flows or progress in US-Iran talks, which remain “vague and at times conflicting.”
Kevin Warsh Fed hearing adds policy risk
On Tuesday, attention shifts to Washington, where Kevin Warsh faces his Senate confirmation hearing to become the next Federal Reserve chair nominee.
The hearing is shaping up to be one of the most market-sensitive political events of the week.
Investors will be listening for clues on how Warsh views inflation, especially after the recent oil shock, and whether he still supports the idea of rate cuts in the medium term.
Analysts expect him to walk a careful line. On one hand, he has previously pointed to disinflationary forces from AI and deregulation. On the other, stabilizing labor markets and firmer inflation prints could complicate the case for easing.
Deutsche Bank noted that Warsh is “not structurally dovish,” despite earlier support for lower rates, and that he will likely stress vigilance on inflation before any policy easing resumes.
Markets may also react to his comments on Fed independence and balance sheet policy, both of which have become politically sensitive topics.
Earnings season ramps up with Tesla in focus
Meanwhile, earnings season is accelerating, with 88 S&P 500 companies set to report this week.
The spotlight is firmly on Tesla, which reports Wednesday after the close. Investors will be watching for updates on its AI ambitions, including the AI5 chip timeline, robotaxi rollout plans, and capital spending guidance.
Tesla has already delivered stronger-than-expected Q1 vehicle numbers, suggesting demand may be holding up. Still, analysts are focused less on deliveries and more on spending discipline.
Intel also reports Thursday, with expectations muted after a weak prior quarter. However, some analysts see upside potential if AI-related chip demand and pricing strength continue to support margins.
Other notable names on deck include IBM, Texas Instruments, Boeing, and American Express.
Data check: retail sales and consumer mood
On the macro side, Tuesday’s March retail sales report will be a key read on US consumer strength, while Friday’s University of Michigan sentiment index will offer a broader view of household confidence.
Deutsche Bank expects a rebound in headline retail sales, driven partly by autos and gasoline prices, though underlying control group spending may look softer.
Thursday’s jobless claims and PMI surveys will also help shape expectations for growth and labour market stability, especially as the Fed blackout period continues ahead of policy signals later this year.
Tech events add AI narrative
Outside of earnings, the AI story continues to build momentum. Google’s Cloud Next conference and Adobe’s Summit are both expected to showcase new AI product developments, reinforcing how central artificial intelligence has become to the tech sector’s growth narrative.