Morning Market Brief

The market opened volatile after a 2.5% drop in the S&P 500, driven by heightened tension in Iran and the broader Middle East. A presidential move to guarantee insurance for vessels transiting the Strait of Hormuz helped calm oil markets, pulling Brent from a peak above $77 to around $72 per barrel before stabilising near $74‑$75. This geopolitical de‑risking sparked a modest rebound, leaving the index just under 1% down at close and setting a cautiously optimistic tone for the trading day.

Analysts highlighted a surprising shift in earnings expectations. Consensus estimates for the S&P 500’s 2026 earnings rose 0.8%, lifting the projected earnings per share to roughly $311. While the first‑quarter outlook remains modest, upward revisions for the second through fourth quarters suggest corporate profitability may outpace historical averages. This earnings momentum provides a buffer against further downside risk and fuels speculation of a relief rally if the regional conflict eases sooner than anticipated.

On the labor front, the ADP report showed the economy added about 68,000 jobs, largely in healthcare, while manufacturing shed roughly 5,000 positions. The sector‑concentrated gain raises questions about the broader impact of recent tariffs, yet the headline figure reinforces a still‑tight labor market. Investors interpret the mixed data as a signal that the Federal Reserve could maintain a patient stance, potentially delivering rate cuts later in the year as growth steadies.