Stocks jumped out of the gate Monday after President Donald Trump on Sunday canceled planned attacks against Iran. Tumbling oil prices and Treasury yields also boosted sentiment at the start of the month, with one of the main benchmarks closing at a new record high.
In a Truth Social post, Trump said that the United States was “locked and loaded,” but he decided to “cancel the attack” against Iran after “perimeters of a deal” had been agreed to.
Trump added that the agreement will include the “Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran’s nuclear threat.”
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Front-month West Texas Intermediate crude futures plunged more than 6% to $79.49 per barrel in response, while yields on the 2-year (-4.1 basis points to 4.25%), 10-year (-5.7 basis points to 4.686%) and 30-year (-4.2 basis points to 5.233%) Treasuries tumbled.
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As for equities, the blue-chip Dow Jones Industrial Average soared 1.3% to 53,178 — a new record closing high — the broader S&P 500 rose 1.5% to 7,600, and the tech-heavy Nasdaq Composite climbed 2.1% to 25,913.
The stock market got “an early boost from falling oil,” says Chris Larkin, managing director of Trading and Investing at E*TRADE from Morgan Stanley, “but the on-again, off-again nature of U.S-Iran diplomacy could mean earnings and jobs data will have to do the heavy lifting for the bulls this week.”
SpaceX highlights busy earnings calendar
Corporate earnings have been impressive so far. “Despite mixed reactions to mega-cap Tech results, underlying fundamentals remain strong,” write BofA Securities strategists Savita Subramanian and Victoria Roloff. “The earnings-per-share beat rate is at its highest level since 2021, with 77% of companies exceeding consensus expectations, well above the 66% post-week 3 average.”
This week’s earnings calendar is a busy one, too. SpaceX (SPCX, +5.7%) is arguably the most noteworthy name reporting, with Elon Musk’s mega-cap space company making its first appearance on the earnings stage as a publicly traded company.
“Revenues, EBITDA [earnings before interest, taxes, depreciation and amortization], Starlink subs, ARPU, AI pricing, Cursor ARR [annual recurring revenue], fiscal year capex guide… all of these matter,” says Morgan Stanley analyst Adam Jonas.
But the bigger issue for investors, says the analyst, is that SPCX stock is currently trading 50% below its all-time high and 15% below its initial public offering (IPO) price.
(Image credit: Miguel J. Rodriguez Carrillo / AFP / Getty Images)
Wall Street will also be watching SpaceX on Thursday, when the first of the company’s lock-up period expires. This is when insiders and early investors will be allowed to sell their shares, which could create volatility in the stock.
“SpaceX used an unusually complex scheme with nine main unlock points instead of one traditional 180-day expiry,” explains Bernstein analyst Douglas Harned, Ph.D. “The design staggers insider selling over roughly the first six months post-IPO, with longer lockups for some institutions and for Elon Musk personally into mid-2027.”
And while Harned admits that this week’s lock-up expiry creates an overhang for the tech stock, he believes “the company’s messaging in its Q2 report will be important,” particularly updates on “the path to full reusable Starship launches.”
Boeing gets double upgraded
The Dow Jones stock is up again to start this week, gaining 8.0% on Monday, after the Federal Aviation Administration (FAA) cleared the aircraft manufacturer’s 737 Max 7 for passenger flights after years of delays.
The blue chip stock got another boost after BNP Paribas analyst Matthew Akers double-upgraded BA to Buy from Sell. He also raised his price target to $300 from $230, representing implied upside of 28% to current levels.
“The post-COVID era of uncertainty for (Boeing) is over,” says Akers. “In the next year, MAX and 777X certifications will drive inventory liquidation and operational stability.”
The analyst believes this will lift free cash flow to $7 billion by 2027, roughly $1 billion more than Wall Street expects.
