US Equity Market Outlook (Post #48): Iran Conflict Reminder That It‘s Not Over Until It‘s Over

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US Equity Market Outlook (Post #48): Iran Conflict Reminder That It‘s Not Over Until It‘s Over

Off the Cuff |

08 Jul 2026 15:35:04 ET │ 9 pages

US Equity Market Outlook (Post #48)

Iran Conflict Reminder That It's Not Over Until It's Over

Not quite a month ago we expressed confidence that falling oil prices on the heels of

an Iran "deal" were setting up the broadening playbook once again (Iran Conflict

Unwind And The Broadening Set Up). Since that specific point in time, the S&P has

traded roughly flat but with outperformance by Health Care, Financials, Utilities,

Industrials and Energy while the AI trade has faded. In turn, we pressed the

broadening call headed into Q3 with our latest SIGN report (Sector and Industry Scott T ChronertAC

Group Navigator: Back to Broadening). +1-415-951-1771

scott.t.chronert@citi.com

To be clear, a driving influence of this call was the argument that an oil price deck

closer to $70 would take some pressure off of the related inflation and interest rate

read-throughs that investors have had to navigate since the end of

February. Today's oil price spike breaks the downtrend in place for the past

month. How to interpret headlines that the ceasefire is over is now a key talking

point.

For now, we will consider this a short-term reversal. We have no insight as to

behind-the-scenes negotiations but do maintain a view that President Trump is

focused on bringing this conflict to an end. To be sure, a sentiment shift in favor of

the broadening call, particularly as Tech has faltered of late, will be tested. Still, with

the Q2 reporting period soon to be upon us, we expect a refocus on fundamentals as

we head toward midmonth and early earnings reporters.

As for the Q2 earnings set up, we remind readers that our current $350 full-year '26