Mixed Iran-U.S. Negotiation Signals Lead to Oil and Gold Dip, U.S. Stocks Volatile with Dow Up

The前景 of US-Iran negotiations repeatedly reversed during Wednesday's trading session, causing Wall Street sentiment to swing wildly, but the three major indices ultimately closed almost flat. The Dow Jones, led by defensive stocks such as Procter & Gamble and UnitedHealth, rose against the trend by 0.36%, closing at 50,644 points and setting a new historical high. Oil prices became the most volatile asset of the day, with WTI crude oil closing down 5.55%, at $88.68 per barrel.

After setting a historical high on Tuesday, the technology and semiconductor sectors experienced significant profit-taking, with the Philadelphia Semiconductor Index falling by 1.36%, Qualcomm plunging 6%, and Nvidia dropping over 1%. Goldman Sachs trading desk data shows that the net selling amount of hedge funds is in the 97th percentile over the past year, with technology stocks being the main targets for selling. At the same time, the S&P 500 Equal Weight Index, which rose in tandem with the Dow, indicates that market breadth is improving; the upward momentum is no longer entirely dependent on large-cap technology stocks.

The US dollar rebounded sharply on the day, erasing this week's losses, and spot gold broke below the psychological level of $4,500.

Peace Talks News Dictates Intraday Rhythm

In the pre-market stage, Iran disclosed a preliminary document outlining the framework of a US-Iran Memorandum of Understanding, causing Brent crude oil to initially plunge by 5%. Subsequently, the White House denied the authenticity of the document, leading to a quick rebound in oil prices and a divergence in the US' three major indices from a collective rise.

During the lunch session, Trump reiterated his tough stance at a cabinet meeting, stating he is not in a hurry to reach an agreement and indicating readiness to resort to tough measures once again. Oil prices rose again, putting pressure on US stocks. In the tail end of the trading session, Secretary of State Rubio expressed a preference for a diplomatic solution, while Trump hinted that the Strait of Hormuz "will soon be open to all." The rebound in crude oil prices ended, but the S&P and Nasdaq failed to use this to gain strength, ultimately closing flat.

AJ Bell's Investment Director, Russ Mould, noted that the market expected substantive breakthroughs this week, but patience may be wearing thin if negotiations fail. LPL Financial strategist Adam Turnquist believes that the meaningful reopening of the Strait of Hormuz is a necessary precondition for continued oil price decline.

US Treasury Bonds Flat; Market Awaits Signal of Conflict Resolution

The 10-year US Treasury yield edged down by 1 basis point, to 4.47%. The Richmond Fed's Business Activity Index performed robustly, and ADP employment data was slightly stronger, with market pricing for rate cut expectations cooling slightly.

Morgan Stanley strategist Martin Tobias stated that investors would quickly compress the rate hike risk premium once a peace agreement is in place and oil prices decline, potentially leading to a significant downward movement in US Treasury yields. Brandywine portfolio manager Jack McIntyre pointed out that the overall US economy's resilience to high interest rates complicates the market's response to low oil prices.

Bank of America rate strategist Meghan Swiber believes that oil prices consolidating in the $80 to $100 range are the most troublesome for the Federal Reserve, with expectations for rate hikes effectively suppressing the steepening of the yield curve.

The Debate Over Bubbles and Improving Market Breadth

Bloomberg macro strategist Michael Ball believes that the current uptrend has accumulated some bubble-like characteristics, driven by both option long positions and expectations of continued upswings, suggesting that investors should appropriately increase hedging. Senior strategist Ed Yardeni refutes the bubble theory, characterizing the current market movement as "FEMO" (Fantastic Earnings Momentum), driven by solid corporate earnings, as opposed to the expectation-driven "FOMO" (Fear of Missing Out).

Fundstrat's Mark Newton noted that the proportion of stocks in the Russell 3000 Index trading above their 20-day moving average increased from 30% to 54%, indicating a significant improvement in the breadth of mid and small-cap stocks.