Wall Street Daily (April 7): US stocks closed slightly higher on Monday, with the market staying cautious ahead of Iran's ultimatum; consumer staples led gains as capital returned to short-term certainty

Summary: US stocks closed slightly higher on Monday, with the S&P 500 Index up 0.44%, Nasdaq up 0.54%, Dow Jones up 0.36%, and Russell 2000 up 0.42%; VIX rose to 24.17, a daily increase of 1.26%, indicating that while the market closed higher, defensive sentiment did not dissipate. The key trading context remained Trump’s new ultimatum to Iran, with the market choosing to maintain a tentative rebound ahead of Tuesday’s outcome. On the sector level, consumer staples led gains as capital seemed to return to short-term certainty rather than aggressively chasing high volatility. In major asset classes, the dollar index fell by 0.19%, gold dropped by 0.55%, crude oil rose by 0.49% to $112.61 per barrel, and Bitcoin was quoted at approximately $68,811, a daily increase of 0.69%. Overall, Monday's trading was more akin to 'cautious pre-deadline recovery' rather than a renewed expansion of risk appetite.

I. Major Events

1. With Trump's ultimatum approaching, the market continues to trade around war risks

Trump expanded the threat to include all of Iran’s power plants and bridges, setting a new deadline for Tuesday evening; Iran rejected the 45-day ceasefire proposal, insisting on a permanent end to the war and demanding security guarantees. For the market, this means geopolitical tensions remain high, and Monday's rebound was more of a tentative pricing ahead of the result. Therefore, although indices closed slightly higher, oil prices remained elevated, and VIX did not retreat accordingly.

2. OPEC+ continues modest production increases but fails to alleviate high oil price pressures

Over the weekend, OPEC+ decided to continue its production increase of 206,000 barrels per day in May, emphasizing maritime energy channel security. This move signals stable supply, but the incremental volume remains limited, with core constraints on oil prices tied to transportation risks and geopolitical uncertainties. The market does not view this production hike as a turning point for oil prices but rather interprets it as a marginal buffer to prevent further escalation. As a result, oil prices remain in high-level fluctuations.

3. The service sector continues to expand, but 'growth is resilient, inflation not light'

The ISM Services PMI dropped to 54 in March, which, although lower than the previous reading, remains in expansionary territory. More critically, the price component remains elevated while the employment component is relatively weak: the economy has not yet slid into recession, but cost and inflation pressures have not eased significantly. This combination does not necessarily depress the stock market immediately, but it is sufficient to dampen market expectations for 'rapid rate cuts' or a 'full return of risk appetite'.

II. Major Trends

As of April 6, this short-term pullback triggered by the war shock has largely been repaired, but the medium-term structure remains unchanged. Looking at recent trading sessions, SPY's two-week change has shifted from -5.28% on March 30 to 0.54% on April 6, and QQQ has recovered from -6.89% to 0.09%, indicating that panic pricing at the index level has largely been reversed; however, over a three-month horizon, SPY is still down 4.49%, and QQQ is down 5.48%, suggesting the market is far from re-entering a favorable zone. Structurally, small caps and breadth advantages persist, with IWM outperforming SPY (-1.28% vs. -4.49%) over three months, and RSP also outpacing SPY (-1.14% vs. -4.49%). In terms of style, SPYV continues to significantly outperform SPYG (-1.27% vs. -7.35%), indicating that the mid-term trend favoring value stocks remains intact. Leading tech names are also recovering, with MAGS’ two-week decline narrowing to -1.52%, while XMAG’s two-week performance turned positive at 1.01%, reflecting easing pressure in large tech rather than a few giants taking back control of the market.

III. Market Sentiment

Market sentiment is more cautious than price action suggests. The VIX rose to 24.17, showing that the market remains wary of the Tuesday deadline despite indices closing higher. The CNN Fear & Greed Index improved slightly from 19 to 23, but it still resides in the fear zone, indicating only a minor recovery in investor subjective risk appetite from extreme pessimism. On the options front, the Put/Call ratio retreated slightly from 0.9544 to 0.9465 but remains elevated, signaling that protective hedging positions have not significantly subsided. Overall, Monday's pattern reflects 'defense remains, sentiment slightly warmed up', rather than a shift back to offense.

IV. Market Scan

1. Index ETFs

Index ETFs closed higher overall, but the strength disparity was not significant. QQQ rose 0.60%, making it the strongest among major index ETFs; DIA climbed 0.37%, showing the least elasticity. Considering the four major indices, no clear style rotation emerged on Monday; instead, both tech and traditional heavyweights saw minor recoveries, with tech having a slight edge.

2. Sector Performance

Sector-level signals are more noteworthy. Consumer staples rose 0.94%, making it the strongest sector of the day, while materials fell 0.38%, performing the weakest. This combination suggests that capital did not interpret Monday as a signal of broad risk appetite expansion but instead preferred to allocate some positions toward more defensive areas. Although tech, finance, and consumer discretionary sectors all edged higher, the momentum was insufficient to create a 'full-on offensive' sectoral resonance.

3. Seven tech giants

Within the seven leading tech stocks, divergence continued. Apple gained 1.15%, making it the strongest performer in this group, reflecting a preference for cash-flow-stable, core-weight leaders; Tesla declined 2.15%, continuing weakness in high-elasticity directions. The tech sector is not without recovery, but it appears to be 'returning to certainty' rather than indiscriminately chasing high beta.

4. Chinese Equities

Chinese concept stocks experienced modest volatility overall but lacked internal consistency. Futu rose 0.66%, showing relative stability; Tencent Music fell 1.64%, dragging down the line's performance. Chinese concepts on Monday seemed to follow global risk sentiment for minor recovery, failing to form an independent and clear leading theme.

5. Cryptocurrencies

Bitcoin's latest quote is around $68,811, rising 0.69% in a day, with prices continuing to recover mildly. Among related stocks, MSTR surged 6.56%, amplifying Bitcoin's elasticity, demonstrating that high-risk-appetite capital remains willing to engage in niche themes. However, within the broader market context, this reflects localized high-elasticity trading activity rather than confirmation of a full return of risk appetite.

$S&P 500 Index (.SPX.US)$ $SPDR S&P 500 ETF (SPY.US)$ $NASDAQ 100 Index (.NDX.US)$ $Invesco QQQ Trust (QQQ.US)$ $Dow Jones Industrial Average (.DJI.US)$ $State Street® SPDR® Dow Jones Industrial Average® ETF Trust (DIA.US)$ $Russell 2000 Index (.RUT.US)$ $iShares Russell 2000 ETF (IWM.US)$ $Roundhill Magnificent Seven ETF (MAGS.US)$ $USD (USDindex.FX)$ $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $XAU/USD (XAUUSD.CFD)$ $SPDR Gold ETF (GLD.US)$ $CBOE Volatility S&P 500 Index (.VIX.US)$ $Bitcoin (BTC.CC)$ $BTC/USD (BTCUSD.CC)$ $Ethereum (ETH.CC)$ $ETH/USD (ETHUSD.CC)$ $iShares Ethereum Trust ETF (ETHA.US)$ $NVIDIA (NVDA.US)$ $Tesla (TSLA.US)$ $Meta Platforms (META.US)$ $Amazon (AMZN.US)$ $Alphabet-C (GOOG.US)$ $Microsoft (MSFT.US)$ $Apple (AAPL.US)$

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