Investopedia Markets News (all except PF)

• Tesla is scheduled to post earnings Wednesday afternoon, with the electric vehicle maker's stock seen making a big move following the results.
• Tesla is in the midst of a transition to focus more on physical applications of AI, such as autonomous vehicles and humanoid robots.

Tesla is slated to report earnings after the closing bell Wednesday, with traders anticipating a big move from the electric vehicle maker's stock following the results.

Current options pricing suggests that traders expect Tesla (TSLA) shares could swing up to about 6% in either direction by the end of the week. From Friday's close, a move of that size could lift Tesla shares near $424, or drag them back down to $378, erasing some of their recent gains.

Shares surged 15% last week amid a broader rally, as investors cheered signs of progress in the company's AI chip plans. Still, they remain nearly 20% off December's highs.

Investors will be watching closely Wednesday for updates on Tesla's transformation and advances in applications of AI.

Morgan Stanley analysts recently wrote that they will be looking for updates on Tesla's robotaxi plans for the year, and that Tesla could lift its capital expenditures forecast as it spends on expensive new manufacturing efforts.

Tesla is seen posting first-quarter revenue of $22.23 billion, up 15% year-over-year, and adjusted earnings per share of 39 cents, up from 27 cents a year ago, according to estimates compiled by Visible Alpha. Earlier this month, Tesla's first-quarter vehicle deliveries improved year-over-year, but not as much as analysts had hoped.

Wall Street analysts are divided on the stock, but lean more bullish than bearish. Of the 12 analysts with current ratings tracked by Visible Alpha, seven have called it a "buy," compared to four neutral ratings, and one "sell." Their average price target of $432 would suggest about 8% upside from Friday's close.

Investors remain focused on developments in U.S.-Iran relations, with news of a ceasefire and an open-for-business Strait of Hormuz firing up investor optimism on Friday. But some economic and corporate news will also get attention this week.

The conflict has implications for oil prices, inflation and consumer spending. New information on the latter will land with Tuesday's release of March U.S. retail sales data: Investors are keen to see how consumers are handling one of the largest jumps in inflation in years ahead of the Fed’s policy meeting next week and tax refunds often bolstering spending around this time of year. (Observers generally expect the central bank to hold rates steady, though hopes of rate cuts in 2026 haven't faded completely.) Retail spending picked up 0.6% in February, after dipping slightly in January amid harsh weather, according to the Census Bureau.

Quarterly updates from the “Magnificent 7” tech stocks are set to start Wednesday, when Tesla reports results. Investors should have plenty to assess, with the company and CEO Elon Musk generating a flurry of headlines in recent weeks. Sluggish electric vehicle sales have weighed on Tesla shares, and the company is trying to transform into an emerging technology specialist. 

Recent announcements have shed light on Musk’s vision—and lifted share prices. Musk said Tesla finished designing a new chip and brought Intel in as a partner on its “terafab” chip production project. Investors are also thinking about how an initial public offering of Musk's space company SpaceX could impact Tesla. Intel, meanwhile, is also set to report results this week.

The big U.S. indexes touched record highs last week amid optimism that the U.S., Israel and Iran would move closer to resolution. Investors pulled tech stocks higher, showing increased appetite for risk and the tech trade. For the week, the Nasdaq, S&P 500, and Dow all posted strong advances, delivering a third consecutive week of gains across the board. Read Friday's markets recap here. 

Here are some of the most notable events in the week ahead. TradingView publishes a more detailed calendar; clicking the link will take you off the Investopedia site.

• Tuesday, April 21. UnitedHealth Group (UNH) is set to release first-quarter results before the opening bell, followed by a conference call at 8 a.m. ET. Its shares have slumped amid a reported investigation into United's insurance billing practices, rising health care costs and an unexpected leadership change, though higher Medicare Advantage rates have some optimistic they'll rebound.
• Tuesday: The Census Bureau is scheduled to release March retail sales data at 8:30 a.m. ET.
• Tuesday: United Airlines (UAL) is slated to release first-quarter results after the closing bell, and host a conference call the following morning at 10:30 a.m. ET. CEO Scott Kirby recently floated the idea of buying American Airlines, a deal that could create the biggest airline in the world but would likely also raise antitrust concerns.
• Wednesday, April 22. Tesla (TSLA) is set to release first-quarter results after the bell, followed by a webcast at 5:30 p.m. ET.
• Thursday, April 23. American Airlines Group (AAL) is scheduled to discuss its first-quarter results during a conference call at 8:30 a.m. ET. Several carriers have raised fares to offset soaring jet fuel prices, and investors will look to see whether price increases have impacted otherwise strong demand. Southwest Airlines (LUV) is set to talk about its first-quarter results on a conference call at 10 a.m. ET.
• Thursday: Intel (INTC) is slated to host a conference call on its first-quarter results at 5 p.m. ET. The microprocessor and chip maker expects its performance to improve over the course of the year as a shortage of hardware components eases.

Tariffs are behind the bulk of inflation Americans have experienced over the past year, Diccon Hyatt reports. Beef prices have been rising, but that hasn't hurt Americans' willingness to spend on read met, according to Crystal Kim. And with a SpaceX IPO on the horizon, Colin Laidley explains how analysts think about investing in off-planet activity.

• The Federal Reserve is cautious about cutting interest rates due to persistent inflation risks from energy price shocks.
• Oil prices have dropped but remain significantly higher than at the start of the year, adding inflationary pressure.
• Fed officials are concerned about missing their 2% inflation target for five years, which could impact public confidence.

The Federal Reserve is fighting one inflation battle after another, as one Fed official put it on Friday.

It’s a risk that could make the central bank hesitant to cut interest rates again soon, even as Friday’s reopening of the Strait of Hormuz prompted optimism in markets. Despite Friday’s drop, oil prices remain far above their levels before the Iran war.

If sustained, higher energy prices would be the latest shock to inflation. Prices spiked in 2021 and 2022, and though inflation has mostly cooled since, the seemingly one-time hit from tariffs last year hasn’t had enough time to fade.

What’s more, Fed officials are keen on bringing up one uncomfortable fact: they haven’t met their 2% inflation target in five years. That raises the risk that the public will start to believe the Fed isn’t committed to its inflation target, Chicago Fed President Austan Goolsbee said on Tuesday.

“This is why I’m afraid,” Goolsbee said at the Semafor World Economy conference. “If you add a big inflationary shock from energy before the other one went away, are we getting into an environment where [the Fed’s] credibility takes a hit?”

Persistent inflation and energy shocks could delay rate cuts, affecting borrowing costs and investment decisions for consumers and investors.

Prices on the Brent crude oil benchmark fell to around $90 a barrel on Friday, a welcome reprieve after the over $110 mark they reached at several points of the war. But they’ve still shot up from about $60 a barrel at the start of the year.

There’s a reasonable likelihood that the market “will return to something close to normal” if the Strait of Hormuz stays open, Fed Governor Chris Waller said on Friday. A more temporary disruption could let the Fed look past the oil shock more easily, helping the Fed resume the rate cuts that officials foresaw for this year before the war began.

But Waller, who’d been a key rate-cut supporter before the war, said he’s more “cautious about rate cuts now” and would prefer to hold off until later in the year. And he cited the still-significant risks that continued disruption in energy markets “will bleed into other prices.”

The Fed is getting “one transitory shock after another,” Waller said, alluding to the Fed’s faulty forecasts in 2021 that pandemic-era price shocks would be “transitory.” Prices proved far more pernicious, with inflation rising at an annual pace of 9% at their peak in 2022.

“Learning from that experience, I will be cautious when faced with a sequence of transitory shocks,” Waller said. “While intellectually it makes sense to look through each shock, with a sequence of shocks, policymakers need to be more vigilant.”

The remarks were among the last as Fed officials entered a communications blackout ahead of their April 28-29 meeting.

Markets see virtually no chance of the Fed changing rates at that meeting. But Friday’s news made traders more optimistic that rate cuts could come this year, continuing the Fed’s cuts from 2024 and 2025.

The odds of a cut this year shot up to over 50%, up from less than 30% a day earlier, according to the CME Group’s FedWatch tool, which uses futures market pricing to determine Fed meeting probabilities. But traders also started betting on a rate hike by year-end again, with the FedWatch tool showing an 8% probability.

Rate cut hopes may be misplaced, since the energy shock “may have a longer tail than investors currently believe,” wrote Scott Anderson, BMO’s chief U.S. economist. After all, he noted, energy officials say it’s the largest disruption to oil supply in history.

“I would like to put on rose-colored glasses and believe all is well, but the situation could still go off the rails,” Anderson said.

With the outlook far from clear, analysts expect the main message from the Fed this month to be along the lines of what New York Fed President John Williams shared on Thursday: “This is an unusual set of circumstances, but the current stance of monetary policy is well positioned to balance the risks to our maximum employment and price stability goals.”

The 19-member Federal Open Market Committee will discuss the wide variety of scenarios ahead when they meet at the end of the month.

“I’m not taking anything off the table,” said Goolsbee, the Chicago Fed president.

He said he’d entered the year anticipating rate cuts may be justified, assuming the tariff impact did indeed fade. But the energy shock “pushes it out the longer this goes,” he said. 

Fed Governor Stephen Miran, a former top economic adviser to President Donald Trump who’s been more dovish than his peers, said he’s still anticipating a few rate cuts this year. The energy shock has “increased the risks of higher inflation further out,” he said, but it’s not clear yet that it’ll drastically change the trajectory prices had been on this year.

He flagged that rental prices, a major contributor to inflation data, had been declining. There was also some “statistical noise” keeping inflation elevated, he said, such as higher stock prices driving up portfolio management fees.

Since the Fed’s rate policies take a while to take effect, the question is whether the shock will prove longer lasting, he said. And monitoring how inflation expectations evolve will be critical, he said.

“For monetary policy to respond today to an energy shock over the next few months, you have to believe that prices are moving higher, not now, not in the next few months, but 12 to 18 months from now,” Miran said. 

Other Fed officials are a bit more wary about the inflation picture. 

The Fed has been “missing on our inflation target for five years,” Cleveland President Beth Hammack told CNBC this week. That means that a person spending $100 at the grocery store five years ago is now spending $120—not $110 if inflation had stayed at the Fed’s 2% target.

The job market appears “reasonably in balance,” but the Fed is “persistently missing on the inflation side” of its dual mandate, she said. The Fed should thus start saying that rates could go either way, she argued, rather than sticking with its current bias of cutting.

Not that she sees a hike anytime soon.

“Rates are in a good place,” she said. “My baseline is that we’re going to remain on hold for a good while.”

Take A Number: A Striking Figure In Economic News Today

• Gas prices are expected to fall to as low as $3.65 a gallon by Memorial Day from $4.03 today, according to one estimate.
• The reopening of the Strait of Hormuz has pushed down oil prices and raised hopes that the Iran war will come to a permanent end.

If you're planning to travel this Memorial Day, the trip could be a little easier on your wallet thanks to the reopening of a crucial oil trade route.

That's according to Patrick De Haan, head of petroleum analysis at GasBuddy, who predicts a gallon of regular gasoline will drop to an average of $3.65 to $3.95 by Memorial Day, down from the current nationwide average of $4.03. Gasoline prices are expected to follow crude oil prices, which fell 8% Friday after an Iranian official said the critical Strait of Hormuz waterway was open to commercial traffic, setting the stage for the resumption of traffic through the waterway that typically carries 20% of the world's oil supply.

Falling gas prices would relieve one of the Iran war's most financially painful consequences for U.S. consumers.

Falling gas prices would relieve some of the financial strain from the six-week-old Iran war. Gas prices have surged by more than $1 a gallon after the conflict cut off travel through the strait and sent oil prices soaring, stoking inflation and pushing consumer pessimism about the U.S. economy to a record low.

The falling gas price forecast is an early estimate and will only come about if everything goes smoothly with the strait reopening. As of Friday, it remained to be seen whether ships would actually begin sailing through the strait, and if peace talks between the U.S. and Iran would result in a lasting end to the war.

Take a Number: A Striking Figure in Economic News Today

• A typical SUV driver will have to fork over $58.83 per month to cover the increased cost of gasoline since the Iran war began.
• The extra $1.11 per gallon of gas can be either a nuisance or a significant burden depending on household income and other factors.
• Increased gas prices are the latest of many items that have risen significantly in price since the pandemic, putting household budgets under pressure even as incomes rise.

A typical driver will have to free up nearly $60 a month in their household budgets just to pay for the rising cost of gasoline from the Iran war, according to data from AAA and the Department of Energy.

The figures break down like this: A typical light truck—the category of vehicle that includes SUVs, the most popular type of car—consumes 53 gallons of gasoline a month on average, according to the Department of Energy. With a gallon of gasoline having gone up $1.11 to $4.09 since Feb. 28 when the war began according to AAA, that means they're shelling out an extra $58.83 per month.

High gas prices are not as catastrophic for the economy today as they were in the 1970s, but could do serious damage if they linger for a long time, stoking inflation and reducing consumer spending on other things.

The figure highlights the mounting financial toll of the conflict on household budgets. Economists expect the Iran war to drive up prices for all kinds of things in the months ahead, with the inflation spreading to more products the longer the crucial Strait of Hormuz remains closed to ship traffic, blocking oil and other resources from the Persian Gulf from reaching international markets. (Oil prices plunged on Friday after Iran declared the strait "completely open" for the duration of a ceasefire between Israel and Lebanon.)

The extra cost of gasoline is either a heavy burden or a total non-issue depending on how you travel, how much you drive, your household income, and other factors. As they say, your mileage may vary. For many people, however it's significant: research indicates that people with lower incomes spend as much as 18.3% of their household budgets on fuel.

High gas prices affect the broader economy by reducing the amount of money people have to spend on other products, and also heavily influence perceptions of inflation among consumers. High gas prices are one of the main reasons consumer sentiment plunged to an all-time low in April.

Gasoline is just one of many items squeezing household budgets in the post-COVID era. Housing, health insurance, child care, groceries, electricity and other necessities have all risen in price significantly. Despite a 43% increase in earnings since 2017, 49% of people in U.S. families lacked "the resources to cover essential expenses to live securely" as of 2023, the Urban Institute think tank found in an analysis last month.

• The price of bitcoin soared over the past five trading days, briefly breaking above $78,000 to levels unseen since early February.
• Crypto-linked stocks such as Coinbase, Strategy, and Robinhood were up more than 20% through Friday's close.

The backup dancers stole the spotlight this week.

Bitcoin on Friday briefly broke above $78,000, a level it hasn't seen since early February, amid a recovery rally in risk assets that drove prices up about 9% over the past five trading days through Friday's close. That move, however, pales in comparison to that of crypto-linked stocks—meaning shares of companies like Coinbase (COIN), Robinhood (HOOD) and Strategy (MSTR), which have run up at least 23%. (Strategy is currently up for the year, slightly outperforming the S&P 500; the other two stocks are in the red.)

Bitcoin on Friday briefly broke above $78,000, a level it hasn't seen since early February, amid a recovery rally in risk assets that drove prices up about 10% over the last five trading days through Friday's close. That move, however, pales in comparison to that of crypto-linked stocks—meaning shares of companies like Coinbase (COIN), Robinhood (HOOD) and Strategy (MSTR), which have run up at least 25% through Friday. (Coinbase is currently up for the year, slightly outperforming the S&P 500; the other two stocks are in the red.)

Crypto, it seems, got back to climbing with an assist from equity markets, rather than the legislative news some were watching for. Washington was supposed to be the catalyst for the crypto market's recovery through the passage of a key crypto bill called the Clarity Act, which aims to create a framework to classify digital assets and knit up a loophole unaddressed by the GENIUS Act, which focused on stablecoins. But draft text that was supposed to be released this week was stalled once more, according to Politico.

The recovery in stocks is helping drive other risk assets such as crypto higher, with analysts now reasserting that bitcoin could be a useful way to diversify portfolios in a way that gold can't.

Citi's Alex Saunders in a report published earlier this week wrote that crypto and stock markets are holding hands more firmly than before—which, when stocks are rising, can be good for crypto, too. "Crypto-equity correlations have strengthened following a recent dip," he said. "We saw a significant decline in crypto-equity correlations earlier in the year as cryptocurrencies experienced steep declines in price at the end of January. As this price action cooled, correlations increased again."

That Coinbase, Robinhood, and Strategy have notched meaningful gains lately is probably owed largely to the fact that the group underperformed bitcoin from the top of the year through the end of April 10. DataTrek's Nicholas Colas and Jessica Rabe recently noted in referencing tech shares that "sharp rallies off lows tend to see laggards perform the best," which may apply to crypto shares, too.

Crypto, it seems, got back to climbing with an assist from equity markets, rather than the legislative news some were watching for. Washington was supposed to be the catalyst for the crypto market's recovery through the passage of a key crypto bill called the Clarity Act, which aims to create a framework to classify digital assets and knit up a loophole unaddressed by the GENIUS Act, which focused on stablecoins. But draft text that was supposed to be released this week was stalled once more, according to Politico.

The recovery in stocks is helping drive other risk assets such as crypto higher, with analysts now reasserting that bitcoin could be a useful way to diversify portfolios in a way that gold can't.

Citi's Alex Saunders in a report published earlier this week wrote that crypto and stock markets are holding hands more firmly than before—which, when stocks are rising, can be good for crypto, too. "Crypto-equity correlations have strengthened following a recent dip," he said. "We saw a significant decline in crypto-equity correlations earlier in the year as cryptocurrencies experienced steep declines in price at the end of January. As this price action cooled, correlations increased again."

That Coinbase, Robinhood, and Strategy have notched meaningful gains lately is probably owed largely to the fact that the group underperformed bitcoin from the top of the year through the end of April 10. DataTrek's Nicholas Colas and Jessica Rabe recently noted in referencing tech shares that "sharp rallies off lows tend to see laggards perform the best," which may apply to crypto shares, too.

Whether bitcoin prices will be able to retain recent gains remains to be seen. However, it bodes well for the cryptocurrency that Wall Street firms—most recently Morgan Stanley and Goldman Sachs—continue to launch funds around it, and that Tether, the company behind the world's most circulated stablecoin, and the second largest buyer of bitcoin behind Strategy, recently started buying again. Blockchain data from Arkham Intelligence shows that some 951 bitcoin was moved from an exchange to a wallet labeled "Tether: BTC Reserve," which has an address that matches one previously confirmed by chief Paolo Ardoino.

Meanwhile analysts are making the case that bitcoin could be a useful tool for diversification that differs from gold—a strategy that has worked during the war with Iran. "For investors worried about fiscal risks or debasement, we argue that a mix of Bitcoin and gold may be more robust than a gold-only (or Bitcoin-only allocation," Citi's Saunders said.

• The economic damage from the Iran war is likely to continue even after the announcement of the Strait of Hormuz reopening on Friday, economists said.
• Crude oil prices fell but remained well above prewar levels, and are expected to decline only gradually, keeping upward pressure on gasoline and other prices.
• Progress in restoring the economy to normal depends on the success of peace talks between the two warring nations.

The economic costs of the Iran war could linger long after the Strait of Hormuz reopens to commercial shipping traffic, economists said Friday.

Iran's announcement that the crucial shipping lane was open to commercial traffic came as a relief to financial markets, with major stock indexes ripping higher and oil prices falling on the news. Brent crude oil, the international benchmark, fell more than 8% to over $90 a barrel as of Friday afternoon, down from its recent peak of $118 in March.

However, that was still above the $65 price at the beginning of the year, a sign that the effects of the war continue to linger even if the shooting part of the conflict has stopped. Even if there are no setbacks, the economic shockwaves of the war could continue to ripple for months or even years, economists said.

The reopening of the strait is a major milestone in the conflict, since 20% of the world's oil normally travels by ship through the waterway on its way to international markets from the Persian Gulf. The restriction of the supply and oil and other supplies during the war was its most significant economic impact, pushing up energy prices and causing the price of a gallon of gasoline to surge by more than $1 on average in the U.S. according to AAA.

But, as with the supply chain disruptions caused by the COVID-19 pandemic, untangling the mess could take a long time.

"It's a relief, and it's a step in the right direction," Jon Hilsenrath, senior advisor at StoneX, said in an interview. "But I'm not going to be convinced that the strains that it put on energy supply chains and other supply chains, and the strains that it put on prices, are going to be completely resolved overnight."

The reopening of the strait reduces the risk of a worst-case scenario for the economy, in which soaring oil prices trigger a recession.

Oil prices, for instance, are expected to gradually decline in the months ahead. Brent crude will fall like a feather and still average $88 a barrel by the end of the year in ING's forecast.

"This signals that the worst is perhaps, you know, behind us, and there is clearly an appetite to get deals done from both sides, and that removes or boosts the chances that we will see a meaningful re-escalation," James Knightley, chief international economist at the bank, said in an interview. "But that doesn't necessarily mean we're going to get anywhere back to $65 a barrel of oil where we started the year anytime soon."

There are multiple factors keeping crude prices elevated even with the strait said to be open for business. As of Friday, it remained to be seen how many tanker captains would take their chances on the voyage. Not only that, but oil facilities on both sides of the war were blown up in the fighting, and the extent of the damage is still being assessed, Knightley said. Furthermore, countries that drew down their stockpiles during the war will look to replenish them once the strait reopens, keeping demand for oil high and putting upward pressure on prices, he said.

And even if shipping returns to normal, the very fact that the strait was closed off demonstrates that it could be again at some point in the future, or that Iran could charge a toll to allow ships to pass—a risk that will likely be priced in to oil in the future, Hilsenrath said.

"Even if they don't charge a toll for transportation through the strait, the mere fact that we know that there is some risk of a conflict that disrupts transportation through the strait ought to create some kind of long-term pressure on prices for shipping and energy that goes through there. There's some kind of tax that now exists," Hilsenrath said.

Some economists kept their forecasts for the economic outlook unchanged, since they had already assumed the strait would reopen at some point in April or May. The announcement of the strait reopening reduced, but didn't eliminate, the chances of peace talks breaking down and the fighting starting again—a worst-case scenario for the economy that could lead to soaring gas prices and recessions in the U.S. and global economies.

"The development increases the risk that a more lasting deal could be brokered, reducing the likelihood of extreme downside scenarios crystalising,” Ryan Sweet, chief global economist and Ben May, director of global macro research at Oxford Economics, wrote in a commentary.

The trajectory of the economy hinges on whether the guns stay silent and how quickly shipping returns to normal levels, they wrote.

“The first of these is far from a foregone conclusion, and we remain cautious over a rapid return to normal traffic flows through the strait,” they wrote.

• UnitedHealth Group's first-quarter results are due before the closing bell Tuesday morning, with analysts expecting the insurance giant to report flat revenue and a slight decline in profits for the first quarter.
• Traders are pricing in a move as much as 6% in either direction for the stock after the report.

UnitedHealth Group (UNH) is scheduled to release before the opening bell on Tuesday, with traders pricing in the possibility the stock could return to positive territory for the year following the report.

Based on recent options pricing, the UnitedHealthcare parent is expected to move as much as 6% in either direction by the end of the week. A swing of that size from Friday's closing level could see shares rise to around $344, putting them above where they started the year, or drop to $305.

As of Friday afternoon, UnitedHealth shares had lost roughly 2% since the start of the year and nearly 30% over the last 12 months. The stock and others in the health insurance industry got a boost earlier this month when the Centers for Medicare and Medicaid Services finalized its planned rate increase for next year, which came in higher than expected at 2.5%, which will result in about $13 billion in extra payments for insurers.

A solid report to start 2026 could help boost UnitedHealth's stock after a lengthy slump as the company contended with high healthcare costs, investigations from the federal government and a sudden CEO change last May.

Earlier this month, Raymond James analysts upgraded their rating of UnitedHealth stock, saying the stock's slump over the last year has created an "attractive entry point." The analysts said they see significant room for UnitedHealth to improve its margins by cutting costs.

UnitedHealth Group's first-quarter revenue is projected to come in at $109.81 billion, roughly flat year-over-year. Adjusted earnings per share are forecast at $6.55, down 9% from the same time a year ago, when a slashed outlook led UnitedHealth stock to its worst day in decades.

Analysts are still bullish on UnitedHealth stock despite its struggles over the last year. Nine of the 11 analysts with current ratings tracked by Visible Alpha call the insurance giant a "buy," while two others have neutral ratings. The stock has an average price target just under $366, which represents upside of about 13% from its current level and would be its highest point since October.

• Oracle, Advanced Micro Devices, Tesla, and Palantir are some of the biggest winners of this week's tech rally.
• The recent momentum could point to improving sentiment around AI-related stocks that took a big hit earlier this year.

This week has seen some big tech winners. Many of them were big losers not too long ago.

The tech-heavy Nasdaq rose 1.5% to close at a record high for a third straight day, amid optimism about progress toward the end of war in Iran. Oracle (ORCL) has soared nearly 30% in its best week since the 1990s, making it one of the top-performing stocks in the Nasdaq and S&P 500 over that period. Tesla (TSLA) is up about 15%, while Advanced Micro Devices (AMD), which reached another record high Friday, has added around 14%. Palantir, which has weathered a slump of its own, is also up some 14% from last week.

Many of those stocks were among those most heavily impacted by a broad pullback in the AI trade to start the year amid worries about the sustainability of growth in the sector. Shares of Oracle, which derives more than half of its backlog from OpenAI, were at one point in early February down nearly 60% from September highs driven by demand growth that sent its market value soaring. This week's gains have helped narrow that to about 46%, with some new deals, AI products, and efforts to trim costs helping ease some of the concerns that have weighed on the stock.

Tesla has benefitted over the last few days from optimism about its progress with AI chips, which has helped offset concerns about the near-term health of its auto business. Palantir, which recently got a vote of confidence from President Donald Trump, is also recovering from a deep slump this year.

Tesla and Palantir, like Oracle, still have quite a way to go before reaching last year's records, and are in the red this year.

Now a risk-on attitude in markets is acting as a tailwind to a tech sector already seen as delivering strong earnings growth. In a note to clients Friday, analysts at Wedbush wrote they "believe tech stocks could rally another 15% from these levels into year-end," as AI adoption grows and demand drives strong results.

This article has been updated since it was first published to reflect more recent prices.

• The S&P 500 on Friday topped 7100 for the first time as a temporary reopening of the Strait of Hormuz revived animal spirits.
• Market observers, lay and professional, appear to think the speedy turnaround in U.S. stocks, and the revival of left-for-dead plays like Allbirds, is "not unusual."

It can be hard to know when what goes up will come down.

Take Allbirds (BIRD), shares of which took flight—surging almost 880% at this week's peaks—after the flagging shoe brand announced it would step into the artificial intelligence space. Or, perhaps, a micro-cap called Myseum (MYSE), which pulled in $550 in revenue last year, this week also pivoted into AI and watched its stock surge. Both stocks have pulled back from their highs, but they remain well above where they started, lifted in part by an all-around positive mood: The S&P 500 on Friday topped 7,100 for the first time in history, marking a quick and dramatic turnaround over the past couple weeks, as investors cheered the latest positive Iran war headlines.

Animal spirits—the positive kind— are back, and investors are enjoying themselves. "Pinging allbirds, can't wait for my shoes to suggest better walking strategies," one X user remarked. On Reddit's roiling wallstreetbets forum, participants traded quips like "Breaking: Iran rebrands as AI-ran" and "AI BUBBLE'S BACK ON THE MENU BOYS".

If investors had taken a cue from the market experts who remarked in March that U.S. stocks looked cheap, they would have made a near 15% return—just a few percentage points shy of the S&P 500's gains for all of 2025.

It's possible that this episode has lost some steam. Vanda Research's Viraj Patel in emailed comments said retail investors took profits on Allbirds yesterday; he reported "strong buying" elsewhere, such as in shares of companies like Netflix (NFLX) and Tesla (TSLA). But there may also be a sustained appetite for quick action—whether you view that at as a willingness to play memes, a risky bubble on its way to popping, or a reflection of the health of the AI trade.

"The market is screaming for more AI," Josh Young of Bison Insights wrote in a Friday note. But "Sharp rallies off lows tend to see laggards perform the best, and nothing had lagged going into the March lows as much as Tech," DataTrek's Nicholas Colas and Jessica Rabe wrote earlier this week. "The group's recovery is more a testament to improving investor sentiment than a sudden rethink of the 'AI trade'." Some market watchers have said that see the setup for investors as fraught, with too many risks—including war, inflation and other economic questions—to get comfortable. But others see signs of healing after weeks of Iran-related concern.

"As you move through crises, as you move through these kinds of events, what you tend to see is the market worry a lot and then the first stage of relief comes mostly from removing the weight that people put on the very bad tails that are out there," Goldman Sachs Research's Dominic Wilson said in a recent episode of the firm's Exchanges podcast. "Seeing a recovery period where there's a lot of things unresolved in of itself is not unusual," Wilson said, saying that in some prior cases—such as the Covid pandemic and then tariffs—markets recovered before the crisis had passed.

Others simply see history repeating itself. "This AllBirds story of a struggling consumer brand with a recognizable name using a pubic shell to access a hot thematic narrative...the business doesn't matter, only the association does; in the '90s it was internet commerce; now it's GPU infrastructure," Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research, posted on social media on Wednesday.