Donald Trump's decision to cancel a planned trip by U.S. envoys to Pakistan has deepened doubts about the path to a deal with Iran. Talks had been expected after Iran's foreign minister arrived in Islamabad, but diplomacy has once again hit a wall. There are still rumors of a possible new Iranian proposal to reopen the strait while postponing nuclear talks, and that was enough to lift parts of Asia overnight.

Oil prices reflect that anxiety. Brent crude is up again and remains dramatically above prewar levels. Goldman Sachs has raised its year-end oil forecast. Inflation worries are returning. The Fed is widely expected to keep rates unchanged this week, with markets putting the odds of no move at nearly certain. That should make Wednesday boring, but it will not: Powell's comments may matter more than the decision itself, because investors want to know whether the central bank sees higher oil prices as a temporary shock or as a reason to keep borrowing costs higher for longer.

This meeting also carries political weight. The Justice Department has closed its investigation into Powell, clearing the way for Kevin Warsh, Trump's preferred successor, to move closer to confirmation. Senator Thom Tillis has said he would support Warsh, removing a major obstacle. So the Fed enters the week with its current chair still in place, its likely next chair moving forward, and its independence under unusually bright lights.

The larger problem for investors is that the economic picture is no longer moving in one direction. Stocks have rallied because corporate earnings have been strong. Of the S&P 500 companies that had reported by Friday, more than 81% beat earnings expectations, better than the recent average. That is not nothing. It suggests that corporate America, especially at the top, remains impressively durable. But there is a catch: many of these results capture only the early stage of the Middle East disruption. They may tell us what companies looked like before the full force of the oil shock, not after it.

This week will test that optimism. Roughly 36% of the S&P 500 is due to report results, with Alphabet, Apple, Meta, Amazon, and Microsoft all in focus. The market's favorite story is still artificial intelligence, and investors want proof that the billions being poured into chips, data centers, models, and cloud infrastructure will produce more than expensive press releases. Nvidia is already hovering near record highs ahead of its own results. Qualcomm jumped premarket. Intel, after a huge move in the previous session, continued higher. The AI trade is still alive and powerful.

But even here, the story is getting more complicated. Competition with China over AI is intensifying ahead of a planned Trump-Xi summit next month. Chinese regulators reportedly blocked Meta's more than $2 billion acquisition of AI startup Manus. The White House has accused China of large-scale efforts to steal American AI technology. Leading U.S. AI companies have alleged that Chinese firms used proxy accounts to harvest millions of responses from American models to train their own systems.

Meanwhile, central banks outside the United States are also expected to stand still. The Bank of Japan meets Tuesday. The Fed follows Wednesday. The Bank of England and ECB come Thursday. That same Thursday will also bring a heavy dose of economic data: first-quarter GDP figures for the United States, Europe, and China, as well as U.S. PCE inflation and eurozone inflation. In market terms, Thursday is less a calendar date than a stress test.

Today's economic highlights:

On today's agenda: GfK Consumer Confidence in Germany; CBI Distributive Trades in the United Kingdom; Dallas Fed Manufacturing Index in the United States. See the full calendar here.

  • Dollar index: 98.315
  • Gold: $4,705
  • Crude Oil (BRENT): $107.26 (WTI) $96.40
  • United States 10 years: 4.32%
  • BITCOIN: $77,971

In corporate news:

  • On Semiconductor expanded its collaboration with Nio to support the EV maker's shift from 400V to 900V platforms using EliteSiC technology.
  • A U.S. judge reportedly dismissed fraud claims in Elon Musk's lawsuit against OpenAI and Sam Altman, while other claims are still set to proceed to trial.
  • Chinese regulators blocked Meta's more than $2 billion acquisition of AI startup Manus, signaling tighter scrutiny of strategic AI assets amid U.S.-China technology tensions.
  • Microsoft received planning approval for a hyperscale data center campus in Leeds, with Harworth Group set to receive £53.2 million upon completion of the land sale.
  • Johnson & Johnson will reportedly sell four prescription medicines, including diabetes drugs and blood thinner Xarelto, through TrumpRx and its JNJ Direct platform.
  • Apollo Global Management agreed to buy Forvia's automotive interiors unit in a carve-out deal valuing the business at €1.82 billion.
  • Amazon and Veolia formed a partnership to use recycled wastewater for cooling Amazon Web Services data centers in Mississippi, with the first facility expected in 2027.
  • Moderna faces a fresh patent lawsuit from CureVac, which alleges that Spikevax used its proprietary mRNA technology without authorization.
  • DeepSeek's new V4 AI model drew a muted market reaction, suggesting investors have become more accustomed to efficient Chinese AI models and rising domestic competition.
  • Blackstone and Related Digital finalized financing for a $16 billion Oracle data center project in Michigan, with DTE Energy supplying power supported by battery storage funded by Oracle.
  • Dow and RDM Group announced a collaboration on fiber-based food packaging made from recycled fibers and recycled plastic.
  • Nvidia has surpassed a market capitalisation of $5 trillion.
  • Google plans to invest $40 billion in Anthropic, according to the WSJ.
  • Marvell is strengthening its strategy in the optical sector with the acquisition of Polariton.
  • Today's key earnings: Verizon, Public Storage, Nuco, Celestica, Deutsche Boerse, Galp Energia, Nordex…

Analyst Recommendations:

  • Comfort Systems Usa, Inc.: UBS upgrades to buy from under review with a price target raised from USD 1680 to USD 1992.
  • Digital Realty Trust, Inc.: HSBC downgrades to hold from buy and raises the target price from USD 193 to USD 210.
  • Fortinet, Inc.: Arete Research upgrades to buy from sell and raises the target price from USD 83 to USD 104.
  • Intel Corporation: DZ Bank AG Research upgrades to hold from sell and raises the target price from USD 36 to USD 80.
  • Msc Industrial Direct Co., Inc.: KeyBanc Capital Markets upgrades to overweight from market weight with a target price of USD 117.
  • The Campbell's Company: Bernstein downgrades to market perform from outperform and reduces the target price from USD 27 to USD 21.
  • Atlassian Corporation: Cantor Fitzgerald maintains its overweight recommendation and reduces the target price from USD 146 to USD 98.
  • Baker Hughes Company: HSBC maintains its buy recommendation and raises the target price from USD 67 to USD 85.
  • Booking Holdings Inc.: Mizuho Securities maintains its outperform rating and reduces the target price from USD 6000 to USD 230.
  • Charter Communications, Inc.: Citi maintains its buy recommendation and reduces the target price from USD 290 to USD 230.
  • Gartner, Inc.: Jefferies maintains its hold recommendation and reduces the target price from USD 255 to USD 165.
  • Ge Vernova Inc.: CICC maintains its outperform rating and raises the target price from USD 857 to USD 1175.
  • Nextpower Inc.: Mizuho Securities maintains its neutral recommendation and raises the target price from USD 90 to USD 112.
  • On Semiconductor Corporation: Morgan Stanley maintains its equalwt recommendation and raises the target price from USD 64 to USD 85.
  • Pinterest, Inc.: Loop Capital Markets maintains its hold recommendation and raises the target price from USD 18 to USD 22.
  • Reddit, Inc.: New Street Research LLP maintains its neutral recommendation and reduces the target price from USD 225 to USD 170.
  • Sandisk Corporation: Morgan Stanley maintains its overweight recommendation and raises the target price from USD 690 to USD 1100.