Energy Prices Surge as Geopolitical Tensions Reignite
Crude oil markets jolted higher after the U.S. administration rejected Iran's latest proposal to end the ongoing conflict, reigniting fears that disruptions in the Strait of Hormuz could drag on for weeks or even months. Brent crude briefly punched above $105 a barrel, while U.S. crude climbed near $100, putting both benchmarks roughly 40% higher than where they stood when hostilities began earlier this year.
The market's anxiety is rooted in geography. The Strait of Hormuz normally handles about 20% of global oil and gas flows, and continued closures are raising the specter of inflation, stagflation, soaring pump prices, and cross-sector ripple effects that could pull the broader economy down with them. And yet, equities have refused to bend. Four major indices closed in the green for the session, with traders apparently betting that global demand and the AI-driven growth narrative can keep stocks resilient even as energy costs rip higher.
A Sluggish Spring for Housing
The spring housing market, often a bellwether for consumer confidence, is sputtering. Existing home sales rose just two-tenths of a percent in April, reaching an annualized pace of 4.02 million units — well short of the stronger rebound that economists had penciled in.
Affordability remains the choke point. The average 30-year fixed mortgage rate climbed back above 6.4%, and the median home price hit a record April high of $417,700. On a brighter note, inventory has improved meaningfully, with 1.47 million homes now sitting on the market. Still, elevated borrowing costs and broader economic uncertainty are keeping would-be buyers on the sidelines.
What is emerging is a clear K-shaped split in the market. Wealthier buyers remain active, particularly at the high end, while affordability headwinds are increasingly locking out first-time and middle-income households. It is a divergence that will likely shape housing's recovery path for years to come.
Wall Street Lifts Its Sights
Even with these headwinds, a parade of analysts is raising its year-end targets for the S&P 500. One prominent strategist boosted his target from 7,700 to 8,250, pointing to what he describes as an earnings melt-up — consensus earnings expectations for the current and coming years are rising more quickly than his team has ever observed. The key assumption underpinning the call is a resilient economy, with the longer-term forecast of 10,000 on the S&P by the end of 2029 still in place and possibly arriving ahead of schedule.
South Korea: The International AI Trade
Optimism is even more pronounced overseas, where one major U.S. investment bank lifted its bull-case target on the Kospi to 10,000 — implying roughly 25% additional upside from current levels. The Korean benchmark is already up more than 80% this year and has notched over 70 fresh all-time highs in the past twelve months. Other firms have followed the trend, with one bank raising its target to 9,000 and another to 8,500. The index hit yet another record overnight, and the U.S.-listed EWY South Korean ETF posted a record close of its own.
For investors hunting exposure to both AI and international equities — arguably where the action is right now — the South Korean market has become one of the most compelling vehicles available.
What's on Deck
The next session brings two notable earnings reports. JD.com is set to report before the open, with analysts expecting earnings of about 57 cents on revenue of $45.57 billion. The central question is whether the e-commerce giant can balance its aggressive growth investments — particularly in food delivery and instant retail — against profitability pressures in an increasingly competitive Chinese landscape. Margins and management commentary on demand trends will be closely scrutinized.
Oklo presents a very different story. As a pre-revenue company, investors are far more focused on commercialization progress and regulatory milestones than traditional earnings metrics. Consensus calls for a loss of about 17 cents per share.
The CPI Print That Could Change Everything
The biggest event on the calendar is the Consumer Price Index report. Many market participants would not be surprised to see the print come in hotter than expected, with higher energy prices the obvious culprit. Headline inflation is expected to register about 0.6% month-on-month, with the core reading projected at 0.3% to 0.4%. That would push the year-over-year rate to roughly 3.8% — potentially the hottest reading since September 2023.
The pivotal question is whether elevated prices reflect a temporary energy shock or something more structural. Equally important is how the CPI feeds into the PCE index, the Federal Reserve's preferred inflation gauge. Much of the equity rally has rested on the Fed's current easing bias, and any data that forces a rethink of that posture could meaningfully shift the narrative. With oil prices climbing, a housing market splitting in two, and equity targets being raised across the board, the upcoming inflation data will be a critical signal for what comes next.