Market Eyes Earnings Pivot Following Middle East De-escalation Rally

US stock markets experienced a powerful rally this week, driven largely by signs of easing tensions in the Middle East. The reopening of the Strait of Hormuz, a vital artery for global oil transport, triggered a broad-based surge across major indices as peace appeared to be breaking out between Israel and Lebanon. The Dow Jones Industrial Average climbed 869 points, or 1.7%, while the S&P 500 and Nasdaq rose 1.2% and 1.5% respectively. Notably, the Nasdaq achieved its longest winning streak since 1992, extending its positive run to 13 consecutive sessions. Despite the optimism, the US government has indicated that its naval blockade on Iranian ships and ports will remain in full force until a formal deal is reached with Washington. The coming week will test the rally's sustainability through a dense schedule of corporate reports. In the aerospace and defense sector, RTX and Lockheed Martin are positioned as strong plays, while Boeing is expected to address concerns regarding aircraft demand that had previously been weighed down by conflict fears. Market participants are also closely watching Tesla, with a focus on robotics and autonomy over core vehicle sales, and Intel, where a turnaround effort under CEO Lip-Bu Tan is under scrutiny. Additionally, GE Vernova and Vertiv remain central to the data center infrastructure trade, though high expectations for Vertiv may warrant caution. The week concludes with reports from Blackstone, where private credit exposure is a key metric, and Procter & Gamble, which may serve as a defensive hedge for investors seeking stability in consumer staples.