Key Takeaways:

• Equities pull back: The S&P 500 and Nasdaq opened lower, retreating from last week’s all-time highs as geopolitical anxieties resurface.
• Diplomacy on the brink: The U.S. seizure of an Iranian cargo ship prompts Tehran to threaten retaliation and cast doubt on its participation in upcoming peace talks.
• Hormuz confusion reignites oil: Crude prices surged over 3% as conflicting reports emerge regarding the operational status of the Strait of Hormuz.
• Corporate earnings wave: Investors brace for a flood of Q1 results from industry giants like Tesla, Intel, and American Express to gauge the war’s macroeconomic impact.

Wall Street opened mostly lower on Monday, slamming the brakes on a historic rally as a sudden flare-up in geopolitical tensions between the United States and Iran cast severe doubt on the longevity of a fragile ceasefire deal slated to expire later this week.

By the opening hour of trading, the benchmark S&P 500 index was down 0.2% to 7,114.68 points, while the tech-heavy NASDAQ Composite slipped 0.3% to 24,408.94 points. The blue-chip Dow Jones Industrial Average hovered fractionally lower at 49,439.30 points.

The muted open stands in stark contrast to the prior week, when the main averages surged by more than 1% to touch all-time highs. That rally was heavily fueled by joint announcements from U.S. and Iranian officials suggesting that the Strait of Hormuz—a vital maritime artery facilitating roughly a fifth of global oil flows—was once again open to commercial shipping after weeks of closure.

Optimism was further bolstered by rhetoric from President Donald Trump, who told the New York Post that a U.S. delegation led by Vice President JD Vance was en route to Pakistan for further peace talks, adding he was willing to personally meet with senior Iranian leaders if a breakthrough was achieved.

Blockades and Broken Diplomacy

However, the geopolitical landscape fractured rapidly as the new trading week commenced. The diplomatic momentum stalled after President Trump announced that American forces had seized an Iranian-flagged cargo ship attempting to run the active U.S. naval blockade of Iran’s coast and ports.

Tehran responded with immediate threats of retaliation, strongly suggesting it will boycott the highly anticipated negotiations with the U.S. later this week. The rhetoric out of Washington also escalated sharply, with Trump warning that the U.S. could “blow up all power plants and bridges” in Iran if Tehran fails to agree to a comprehensive peace deal.

Chaos in the Strait Whipsaws Energy Markets

The diplomatic breakdown immediately spilled over into the energy sector, creating intense confusion regarding the physical status of the Strait of Hormuz.

Following a series of conflicting statements from Iranian officials, it remains entirely unclear whether the weekslong closure of the strait had genuinely been lifted or if Iran had slammed the bottleneck shut once again. While tracking data from Kpler showed that more than 20 ships successfully crossed the strait on Saturday—the highest volume since March 1—Iran has since declared the chokepoint officially shuttered in retaliation to the U.S. naval blockade.

Against this chaotic backdrop, oil prices reversed last week’s steep plunge. Brent oil futures, the global benchmark, surged 3% to $93.09 a barrel, while U.S. West Texas Intermediate (WTI) crude futures climbed 3.6% to $85.60 a barrel.

Earnings Season Hits Full Stride

While macroeconomic headlines dominate the tape, traders are simultaneously preparing to navigate a massive wave of corporate earnings. A slew of highly anticipated Q1 results scheduled for this week will provide critical insight into how the Middle East conflict is directly impacting the bottom lines of Corporate America.

The week started on a positive note, with steel producer Cleveland-Cliffs posting better-than-expected first-quarter revenue, buoyed heavily by higher average selling prices.

Moving forward, analysts will be keeping a close eye on reports from credit-card titan American Express, semiconductor giant Intel, healthcare heavyweight UnitedHealth, defense contractor RTX Corporation, and electric vehicle pioneer Tesla.

Additionally, investors are looking ahead to Thursday, when fresh U.S. business activity data for April will be unveiled, serving as a key health check for the economy following a weakened reading in March.