EBC Markets Briefing | US stocks extended losses without peace deal

The S&P 500 posted back-to-back losses on Tuesday, dragged down by major tech stocks as fading hopes for a reopened Strait of Hormuz worsened doubts about a US-Iran resolution.

A senior Pakistani minister stated that the US and Iran are close to an arrangement over the Strait of Hormuz, providing hope for a deal despite both sides hardening their negotiating stances.

JP Morgan raised its year-end target for the S&P 500 index to 8,000, pointing to strong corporate earnings and growing confidence that large-scale AI investments will accelerate revenue growth.

However, the bank kept its forward valuation multiple target at roughly 20 times, pointing to high interest rates, geopolitical risks, and a large supply of equity and debt issuance.

Robust corporate earnings from America's biggest firms are driving major stock indexes to record highs, quieting fears that the market rally relies entirely on a few AI favourites.

The one-month average daily ratio of calls to puts on the S&P 500 has risen to 0.9, among the most bullish readings in at least four years, according to a Reuters data analysis.

EBC Financial Group analyst says that the S&P 500 was undergoing a clear consolidation. A push below 7,700 level would indicate a deeper corrective phrase, potentially dragging the index down towards the gap near 7,630.

Asset Recap

As of market close on 11 August, among EBC major products, Phillips 66 shares led gains. The company, along with Kinder Morgan and HF Sinclair disclosed a final investment decision for a pipeline project.

Honeywell International slid, driven by a combination of cautionary executive commentary at a major industry conference and lingering spillover sentiment from recent structural shifts.

Brazil's central bank said that its tight monetary policy is increasingly affecting economic activity, though inflation continues to be driven by demand pressures that require keeping interest rates at restrictive levels.

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