The S&P 500 opened slightly lower Thursday after Wednesday’s simultaneous all-time highs in both the S&P (7,022.95) and Nasdaq (24,016.02). That mild pullback — S&P -0.3%, Nasdaq -0.23%, Dow -0.1% in early trading — is not a reversal. It is the market pausing to breathe after the fastest oversold-to-overbought Relative Strength Index (RSI) swing since the early 1980s. The 7,000 level on the S&P is the line Piper Sandler identified as the key hold. It is holding. The setup from here is not whether the rally was real — it was — but whether the three assumptions that drove it survive contact with the coming days.
Those three assumptions are: war ending, Fed patient, AI cycle continuing. All three are in play this morning. TSMC confirmed the AI cycle thesis before the open — revenue +38% year-over-year, Chief Executive C.C. Wei declaring “our conviction in the multi-year AI megatrend remains high.” On the war: Pakistan’s army chief is in Tehran and a second round of US-Iran negotiations is being arranged, but no date is confirmed. On the Fed: Powell’s term expires in 29 days and Treasury Secretary Scott Bessent’s secondary sanctions warning Wednesday — the “financial equivalent of a bombing campaign” aimed at any institution doing business with Iran — adds a new layer of geopolitical financial risk that complicates both the diplomatic and the monetary picture.
The IEA Executive Director Fatih Birol provided the starkest framing of the underlying energy situation this week: “This is the largest energy crisis we have ever faced. The longer it goes, the worse it will be for economic growth and inflation around the world.” Europe has weeks of jet fuel remaining if Hormuz flows are not restored. That warning sits underneath today’s mild pullback as the reason “mild” cannot be taken for granted.
Thursday’s mild pullback is textbook post-ATH behavior. Both the S&P and Nasdaq extended briefly to new intraday records at Thursday’s open before pulling back, confirming the rally has momentum but also that sellers are present above 7,000. The internal session structure matters more than the headline number: technology names are mixed, with AI infrastructure (TSMC-adjacent plays like Nvidia, Broadcom) attempting to hold while Tesla gives back yesterday’s +7% on the Cybertruck internal-sales story. The Dow is fractionally lower, consistent with the bifurcation pattern all week.
The session’s character confirms two things established over the past two weeks. First: the market’s primary driver is war-end optimism and AI capex, not broad economic recovery — less than half of S&P 500 components participated in Wednesday’s ATH. Second: the Dow’s persistent underperformance (energy, industrials, rate-sensitive) against the Nasdaq (AI, tech, communication services) is not a temporary anomaly. It is the structural signature of this cycle. The session to watch is not today — it is the first session after Netflix reports tonight, after Bessent’s sanctions threat gets a diplomatic response, and after the 7,000 floor is either held or broken on a meaningful volume day.
🔎 Schwab Crypto: Charles Schwab launched its spot Bitcoin and Ethereum trading platform Thursday, rolling out to retail clients in phases. Bitcoin and Ethereum only at launch. One of the largest US retail brokerages entering direct spot crypto is a structural adoption signal — not a price catalyst, but a legitimacy milestone.
Taiwan Semiconductor Manufacturing Company (TSMC) reported first-quarter 2026 results before Thursday’s open that confirmed the upstream end of the AI infrastructure investment cycle. Revenue came in at the high end of guidance — between $34.6 billion and $35.8 billion — representing a 38% year-over-year increase. The growth is driven by continued maturation of 3-nanometer and 5-nanometer nodes and the early ramp of 2-nanometer Gate-All-Around technology. Chief Executive C.C. Wei: “AI-related demand continues to be extremely robust. Our conviction in the multi-year AI megatrend remains high, and we believe semiconductor demand will remain very strong.”
TSMC simultaneously raised its 2026 capital expenditure guidance to the high end of its previously stated $52 billion–$56 billion range — up from approximately $40 billion in 2025. That capex trajectory is the physical manifestation of every AI infrastructure deal announced this quarter: CoreWeave’s $30B–$35B spend, Meta’s $115B–$135B commitment, Amazon’s AWS AI buildout. TSMC is the foundry that turns those commitments into silicon. When TSMC raises capex guidance, it is confirming that its customers — Nvidia, Apple, Broadcom, AMD — have given it enough contracted demand to justify the spend. That is not speculation; it is signed contracts.
TSMC did flag one Iran-related supply chain risk: the conflict has disrupted supplies of helium, a critical purging gas used in semiconductor manufacturing. Taiwan and Japan are among the markets most exposed to Hormuz disruption, and helium sourced from Gulf producers transits the strait. The flag is precautionary rather than operational for now, but it is the first direct supply chain link from the Iran conflict to the AI infrastructure build. CEO Wei confirmed the company is monitoring it closely. TSMC reports full earnings Thursday April 16 — these are the pre-market highlights from the call.
Treasury Secretary Scott Bessent on Wednesday warned that the United States is preparing to impose secondary sanctions on financial institutions that do business with Iran. He called the measure the “financial equivalent” of a bombing campaign — signalling the administration is activating economic warfare in parallel with the diplomatic track. Secondary sanctions are the most aggressive tool in the US Treasury’s arsenal: they do not target Iran directly, but threaten any third-party institution — Chinese banks, European commodity traders, SWIFT-connected financial entities — that maintains Iranian financial relationships. The threat alone forces institutions to choose between their Iran business and their US dollar access.
The immediate targets are clear. Chinese state banks have been the primary financial conduit for Iranian oil sales since 2018 sanctions were reimposed. If Bessent follows through with secondary sanctions, those banks face cutoff from the US correspondent banking system — a risk significant enough that past rounds of secondary sanctions caused major Chinese banks to stop processing Iranian transactions. Commodity traders handling Iranian crude through third-country intermediaries face similar exposure. The secondary sanctions threat also complicates Iran’s reported plan to charge cryptocurrency tolls on Hormuz transit — any financial institution processing those toll payments would be immediately exposed.
The diplomatic tension is evident. Bessent’s warning came the same week Pakistan’s army chief flew to Tehran to arrange a second round of peace talks. The dual-track approach — negotiate while escalating financial pressure — is consistent with the administration’s stated posture, but it narrows the room for Iranian manoeuvre. Iran’s foreign minister meeting with Pakistan’s army chief Thursday is partly a response to this pressure. Whether the sanctions threat accelerates a deal or hardens Iranian resistance is the key unknown heading into next week.
Initial jobless claims fell 11,000 to 207,000 in the week ended April 11 — the biggest single-week decline since February. The prior week’s figure was revised down by 1,000 to 218,000. Continuing claims rose 31,000 to 1.818 million in the week ended April 4, but the prior week was also revised lower. The headline read: the labor market is intact. Layoffs remain historically low. The war period has not yet produced a visible labor market deterioration. This is the data that keeps the Federal Reserve’s soft-landing thesis viable — at least for one more week. Industrial production and capacity utilization also released Thursday morning; both are expected to show energy sector headwinds but machinery and manufacturing holding near trend.
PepsiCo reported Q1 adjusted earnings per share of $1.61, beating the $1.55 consensus. Revenue reached $19.44 billion against estimates of $18.95 billion. The driver: strategic price cuts on Doritos, Lay’s, Tostitos, and Gatorade won back price-sensitive volume that had shifted to private label. The company reiterated its full-year outlook but issued a pointed macro warning: “As we look ahead, the macroeconomic environment has become more volatile and uncertain because of ongoing geopolitical conflicts.” The Beige Book’s warning about low-and-moderate income consumer stress is visible in PepsiCo’s strategy: price reduction is the only lever working to maintain volume in that cohort. That is a real-economy signal the ATH does not fully reflect.
Field Marshal Asim Munir — Pakistan’s army chief and the architect of the Islamabad ceasefire framework — arrived in Tehran Wednesday and met with Iranian Foreign Minister Abbas Araghchi. The meeting is the highest-level Pakistani diplomatic contact with Iran since the ceasefire was announced April 8. A White House official told CNBC that a second round of direct US-Iran negotiations is under discussion. Trump told the New York Post the talks could happen “over the next two days.” Nothing is officially scheduled.
Defense Secretary Pete Hegseth warned Iranian leaders to “choose wisely” on whether to accept a peace deal, according to Fox News, saying the US military was prepared to respond if negotiations fail. Trump in the same week said the US has “a reset going” — that warships are loaded with “the best weapons ever made” and ready to act if talks collapse. The dual-track posture — negotiate while maintaining credible military threat — is consistent but leaves the ceasefire fragile. The Hormuz mine-clearing operation Trump claimed is underway would, if completed, remove Iran’s last physical leverage point. Iran has not confirmed any mine-clearing cooperation.
Powell’s term expires May 15. Kevin Warsh, the nominated successor, dissented against QE in 2010 and is expected to run a tighter policy than the market is currently pricing. The ATH was made on a patient-Fed assumption. The DOJ probe of the Federal Reserve’s HQ renovation adds institutional uncertainty at exactly the wrong moment — the May 28–29 FOMC meeting will be the first under new leadership. If Warsh signals a hawkish pivot before June, risk assets reprice from the top.
Secondary sanctions on Iranian financial counterparties would force Chinese banks to choose between Iranian business and US dollar access. Past rounds caused significant friction in China-US financial relations and contributed to renminbi volatility. If China retaliates — through Treasury selling, export controls on rare earths, or SWIFT-alternative expansion — the financial pressure track that Bessent called a “bombing campaign” could trigger return fire that lands on US markets. The diplomatic and financial tracks are not currently synchronized.
IEA Executive Director Fatih Birol this week: “This is the largest energy crisis we have ever faced. The longer it goes, the worse it will be for economic growth and inflation around the world.” Europe has weeks of jet fuel remaining if Hormuz flows are not restored. Japan, South Korea, India, and China face the most acute exposure. The IEA warning is not a market-moving event by itself — but it defines the floor of the downside scenario if the ceasefire collapses. Every day without a Hormuz timeline puts the June FOMC on a harder path.