A ceasefire in the Middle East has stocks and crypto roaring higher on Wednesday morning. The Daily Breakdown digs into the rally.
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What’s Happening?
Markets were under pressure at one point on Tuesday, but US stocks and major cryptocurrencies finished the session mostly unchanged as concerns about further escalation were offset by hopes for a ceasefire. Ultimately, the latter prevailed, and markets are reacting accordingly.
The QQQ ETF is up 3.5% this morning, while S&P 500 ETFs such as VOO, IVV, and SPY are higher by nearly 3%. Bitcoin has reclaimed $70,000, Ethereum has moved above $2,250, and gold has rallied past $4,800.
👀 S&P 500 Spotlight
Oil-sensitive names are surging this morning, with airlines including Delta Air Lines, Southwest, and United each up more than 10%. Cruise operators such as Royal Caribbean, Norwegian Cruise Line, and Carnival are also posting notable gains.
Inflation Update
The February PCE report will be released tomorrow at 8:30 a.m. ET. This is the Fed’s preferred inflation gauge, particularly core PCE, although it will not fully reflect the recent spike in energy prices. The same cannot be said for the March CPI report, which will be released Friday morning at 8:30 a.m. ET. By the end of the week, markets should have a much clearer read on inflation.
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The Setup — QQQ
The QQQ chart above reflects this morning’s rally, showing the ETF reclaiming the $590 to $595 zone. That area served as support through February and the first half of March, and it also lines up with the 200-day moving average. Going forward, bulls will want to see QQQ hold this zone on any pullbacks. For now, key resistance — and the all-time high — remains near $635.
Options
Investors who are bullish could consider calls or call spreads as one way to speculate on further upside, while bearish investors could consider puts or put spreads to speculate on a further move to the downside. For options traders, it may be advantageous to have adequate time until the option’s expiration.
To learn more about options, consider visiting the eToro Academy.
What Wall Street’s Watching
USO
Oil prices are tumbling, with crude futures down more than 17% this morning to $93 a barrel. That has the oil-focused USO ETF down big this morning too, along with the energy sector — XLE — and top energy stocks like Exxon Mobil, ConocoPhillips, and Occidental Petroleum. Check out the chart for USO.
DAL
Alongside the move in oil, Delta Air Lines also reported its first-quarter results this morning. Revenue of $15.9 billion topped estimates of $14.9 billion, while earnings of 64 cents per share beat expectations of 62 cents a share. However, the company expects fuel costs to rise by more than $2 billion through June due to the Iran war, while management left its full-year outlook unchanged because of the uncertainty. Dig into the fundamentals for DAL.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.