US stocks drop on Middle East fighting, tech earnings caution

Wall Street stocks retreated Monday, with early gains fading as the escalating US-Iran conflict lifted oil prices and markets awaited key earnings reports. Iranian President Masoud Pezeshkian described the country as "engaged in a full-scale war" with the United States. Tehran's Houthi allies in Yemen announced they would blockade Saudi ports, potentially disrupting Riyadh's ability to bypass the Strait of Hormuz for oil exports.

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The whole US Iran situation is sounding a little dicey at the moment.

Fresh fighting followed a weekend where the US reported three new military fatalities and one service member missing in action. Oil prices pushed higher, with Brent oil futures closing up 1.3 percent at $89.22 per barrel after earlier breaching $90 a gallon. US gasoline prices jumped back above $4 a gallon, according to the AAA motor club.

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There is not a lot of conviction right now.

"The whole US Iran situation is sounding a little dicey at the moment," said Briefing.com analyst Patrick O'Hare. After last week's losses, semiconductor stocks advanced, but O'Hare noted investors remained hesitant about whether tech company earnings will meet outsized expectations, particularly due to artificial intelligence.

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The question is not so much if giants like Alphabet or Tesla will beat the expectations, but 'Will they beat them by enough?'

"There is not a lot of conviction right now," O'Hare said. "The question is not so much if giants like Alphabet or Tesla will beat the expectations, but 'Will they beat them by enough?'" Earlier Asian stock markets ended mostly lower, burdened by higher oil prices and lingering concerns that the AI sector may be overbought. Crude futures have surged over the past week as Washington and Tehran traded fire, raising fears of sustained disruption in the Strait of Hormuz, through which about one-fifth of the world's oil normally passes.

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We have received messages - without going into details - but the main point is that the diplomatic apparatus has been active in recent days and ideas have been conveyed to us by certain mediators.