After Brutal March, Rally Builds on Hope for Peace

Published as of: April 1, 2026, 9:13 a.m. ET

(Wednesday market open) Markets built on Tuesday's dramatic gains early, encouraged by hints that the war may wind down. President Trump addresses the nation tonight, and domestic crude briefly dropped under $100 per barrel this morning. There's also data to mull, including an upbeat ADP monthly employment gain of 62,000 and February retail sales that climbed 0.6%, topping expectations.

Tuesday's rally wrapped up a disappointing March that saw the S&P 500 Index descend 5%. How much yesterday's action represented hopes for de-escalation and how much was end-of-quarter short-covering and "window dressing"—when fund managers shift positions as a quarter ends—is up for debate. If the move proves technical and crude stays elevated, there's no guarantee better vibes will last. A single Middle East headline could change sentiment.

Major indexes enjoyed their best session in almost a year yesterday, up 2.9% for the S&P 500 Index, after media reports said Iran's president might be willing to end the war. The sectors hardest hit over the last month, including communication services and info tech, both rose more than 4%. Optimism also centered on ideas that China and Pakistan could bring warring parties together, though U.S. and Iranian demands seem far apart. Both volatility and Treasury yields rose slightly ahead of the opening bell, sending mixed signals as stocks climbed.

1. Retail sales, ADP deeper dive: Today's double-barrel action in data looked solid. Consensus for monthly retail sales growth—which totaled 0.6%—had been 0.5%, according to Briefing.com, compared with an upwardly revised -0.1% in January when cold weather sapped shopping. Control-group retail sales—which factor into the government's gross domestic product (GDP) calculation—were solid at 0.5%, up from 0.2% in January. Keep in mind that retail sales reflect what consumers were doing before the war. For ADP, analysts had expected a rise of 42,000, down from a revised 66,000 in February. Goods- and service-producing jobs rose evenly in March, ADP said. Looking ahead to Friday's keystone nonfarm payrolls, analysts expect slightly more than 50,000 jobs added, a marked improvement from the 92,000 lost in February. Equity markets are closed for Good Friday, meaning only bonds will initially trade nonfarm payrolls data. That makes weekend futures trading important for a sense of initial response to the numbers.
    
2. Inflation yes, rate hikes likely no: The war sent European inflation readings up in March from February, and the U.S. could face similar challenges. "The longer the energy supply shock lasts and energy prices stay elevated, the greater the chance the price of a broad range of inputs rises and feeds into inflation expectations and wages," said Michelle Gibley, director of international equity research and strategy at the Schwab Center for Financial Research (SCFR). "Inflation expectations remain anchored, but manufacturers are already raising prices with memories of 2022 fresh in their minds." Still, a Federal Reserve rate hike this year appears unlikely and it will likely react to rising inflation differently than it did in 2022, said Collin Martin, head of fixed income research and strategy at SCFR. "Inflation was much higher, the labor market was stronger, and consumer sentiment was better," Martin said. "The Fed will likely be inclined to focus on the potential hit to growth from the oil shock rather than hiking rates to stem a further rise in prices."
    
3. For war policy hints, dial "Y-I-E-L-D": Investors may want to follow Treasury yields for clues on policy decisions that might affect sentiment. Last week's spike to nearly 4.5% in the 10-year note yield preceded the news late Monday that President Trump is considering withdrawing from the war. Last year, tariff policy eased after yields spiked. In another Treasury-related development, the market got positive news yesterday when Berkshire Hathaway's (BRK.B) Warren Buffett said he's buying Treasuries. On a negative note, the Financial Times reported that foreign central banks have slashed their holdings of Treasuries at the New York Federal Reserve to the lowest level since 2012. This, the newspaper said, reflects efforts to prop up their economies and currencies in the wake of the war. One economy to watch is Japan, where the yen fell versus the dollar earlier this week and spurred talk of a possible government intervention and rate hikes. This would likely be negative for the U.S. stock market, potentially causing money to return to Japan from U.S. Treasuries and equities.

• Nike (NKE) cratered almost 11% early today despite earnings beating Wall Street's consensus. Revenue growth was in line with expectations. However, weak guidance for sales to drop this quarter proved to be the dagger, as Nike expects its struggles in China to continue even as North American growth improves.
   
• Dave and Buster's Entertainment (PLAY) climbed almost 8% early today despite disappointing quarterly results. Investors appeared focused on upbeat guidance.
   
• RH (RH) plummeted 18% in early trading after the home furnishings company offered lower-than-expected annual guidance.
   
• Boeing (BA) climbed 2% as Wells Fargo initiated coverage with an overweight rating.
   
• Chip stocks—particularly those focused on the memory section of the market—continued their rebound early today. Some gainers included SanDisk (SNDK), Seagate Technology (STX), and Western Digital (WDC). However, Nvidia (NVDA) just wrapped up its second straight quarterly loss in share value. That's the longest losing streak since it fell three quarters late in 2022, Barron's noted.
   
• Overseas indexes rallied after yesterday's U.S. gains. Europe's markets had their best day in more than a year and Japan's Nikkei 225 jumped more than 5%.
   
• Globally traded Brent crude fell 2.5% but remained above $101 this morning. Many countries are receiving their final shipments of oil that left the Middle East before the war and can't immediately replenish stocks, and Trump told aides he's willing to end the war without re-opening the Strait of Hormuz. Also, The Wall Street Journal said the United Arab Emirates is pressuring Iran to open the strait.
   
• Magnificent Seven stocks performed well yesterday as many investors appeared to re-embrace risk and growth shares. Meta Platforms (META) led the way with 6% gains. Alphabet (GOOGL) rose 5%, and Nvidia (NVDA) climbed more than 5.6%.
   
• Mining stocks rose again Wednesday as metals prices improved on hopes for an end to the conflict and less pressure on global economies. Silver and gold are up today after silver had its worst month in years.
   
• Energy stocks generally tracked lower this morning on ideas oil prices might fall further if the conflict eases.
   
• Airline stocks soared Tuesday after the government paid Transportation Security Administration workers and lines at airports diminished. United Airlines (UAL) rose 8%.
   
• Early today, odds of U.S. interest rates ending the year below the current target range of 3.5% to 3.75% rose to around 38%, compared with zero odds of a cut late last week, according to the CME FedWatch Tool. Chances of rate hikes this year have virtually vanished from futures trading, while investors anticipate nearly a 100% chance of another rate pause at the Fed's meeting later this month.
   
• The Cboe Volatility Index (VIX) descended sharply yesterday, and this morning slipped below 25—traditionally a level indicating heightened market fear. Any VIX rebound might suggest new concerns about the stock rally. There was an increase in general call demand toward the end of last week, the CBOE reported, perhaps a sign that investors expected peace to break out. Still, the VIX complex is relatively flat going forward, not descending below 24 until late December.

D.C. check-in: Get Schwab's take on the Department of Homeland Security shutdown, a new proposed rule for alternative assets in 401(k)s, and what Congress might do about prediction markets in our latest Washington: What to Watch Now.

Shorts to watch: Our latest Short Interest Monitor highlights a wide range of stocks in various industries, including some that made headlines the last few weeks. Learn which stocks investors are shorting and what's driving these trends.

Though crude oil futures (/CL—red line) remained elevated, the futures market anticipates them falling to just above $70 per barrel by late this year, according to the current futures curve. That's still up from about $63 before the war, looking at the futures curve as it appeared a month ago (yellow line).

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

April 2: February factory orders.
April 3: March nonfarm payrolls, March unemployment, equity markets closed for Good Friday and bond trading ends early.
April 6: No major earnings or data expected.
April 7: No major earnings or data expected.
April 8: Expected earnings from Delta Air Lines (DAL), Constellation Brands (STZ), and Applied Digital (APLD).