This week, there’s a peculiar atmosphere on Wall Street that’s almost palpable in the way traders converse but doesn’t quite appear on the screens. Sometimes oil is rising, and other times it isn’t. Before lunch, a single earnings line wipes out $100 billion in market capitalization while stocks are flat and then soaring. No one is in a panic. However, no one appears at ease either.
Overnight on Thursday, Brent crude reached $114.70 before stealthily returning to about $109.80. This is still a long way from the $70 it was trading at prior to Iran and the United States engaging in what no one is formally calling a war. A June barrel briefly printed above $126 before falling back toward $114 in one sparsely traded area of the market. The peak to date has been $119.50, which was set last month. Seeing those figures fluctuate is more like watching a heart monitor than it is like reading a market.
| Field | Detail |
|---|---|
| Topic | Oil prices, equity markets, and the Iran war’s market impact |
| Date of Market Action | Thursday, May 7, 2026 |
| Key Index Move | S&P 500 +0.1%, Dow +413 pts, Nasdaq -0.3% |
| Brent Crude (July contract) | $109.80 per barrel after touching $114.70 overnight |
| Pre-war Brent Price | Roughly $70 per barrel |
| Standout Earnings | Alphabet +5.8% on near-doubled profit expectations |
| Worst Performer | Meta Platforms, down 9.9% on raised AI capex |
| Meta’s New Capex Range | $125B–$145B |
| 10-Year Treasury Yield | Eased to 4.38% from 4.42% |
| Central Bank Stance | Fed, BoE, ECB, BoJ all on hold |
| Geopolitical Trigger | Iran’s closure of the Strait of Hormuz |
| Notable Analyst Voice | Jeff Buchbinder, LPL Financial |
Nevertheless, the S&P 500 is only marginally below the record high it reached earlier this week. By midmorning, the Dow had risen 413 points. The majority of the work was done by Alphabet, which saw a 5.8% increase after profits almost doubled what analysts had predicted. AI is “lighting up every part of the business,” according to Sundar Pichai. This is the kind of statement that is framed in investor decks and subtly ridiculed in trading rooms. It is possible for both responses to be true simultaneously.
After strong quarters, Caterpillar, Eli Lilly, O’Reilly Automotive, and Royal Caribbean were all up more than 6%. To be honest, the earnings season has been better than anticipated. The issue is that fear was never the real problem. What to do when both the ceiling and the floor are moving is the problem.
This week’s cautionary tale is Meta. The business announced it would spend between $125 billion and $145 billion on data centers and AI infrastructure this year after beating profit, which was previously sufficient. The stock dropped 9.9%. Investors are beginning to question whether all of this AI spending will ever be profitable, and they are doing so more loudly than before. On a similar note, Microsoft fell 4.5%. Despite a clean beat, Amazon saw a slight decline. Wall Street seems to be gradually realizing that the AI bill and the AI dream won’t come in separate envelopes.
Beneath it all is the Strait of Hormuz, which has been closed to tankers since Iran closed it, and a US Navy blockade prevents Iranian oil from getting to anyone who is willing to pay. Ahead of a deadline on Tuesday, Trump says negotiations are “going well” but threatens to shut down all Iranian power plants by midnight. According to reports, Iran has rejected the terms of the ceasefire through Pakistani mediators. It’s difficult to ignore the discrepancy between the headlines and the actual performance of oil futures; as one Bloomberg strategist put it, traders no longer recoil at unfulfilled demands.
The Fed has been put on hold. The ECB, the Bank of Japan, and the Bank of England are all in agreement. Jobless claims dropped, Treasury yields eased to 4.38%, first-quarter growth was slower than anticipated, and inflation ticked down. To put it another way, mixed signals are a polite way of saying that nobody knows. According to Jeff Buchbinder of LPL, patience is currently the best course of action. That’s most likely correct. It’s also what people say when they can’t think of anything better.