S&P 500 Holds Above 7,000 as Israel–Lebanon Ceasefire Lifts Sentiment — TSMC Records, Netflix Recovers, Oil Retreats

A late-Thursday agreement on a ten-day ceasefire between Israel and Lebanon has injected a shot of optimism into Friday’s session, sending U.S. equity futures climbing overnight and helping the S&P 500 extend its stay above the 7,000 milestone for a third consecutive session. The deal, brokered through diplomatic channels that have been working quietly behind the scenes, represents the first tangible de-escalation in a Middle East crisis that has rattled energy markets for weeks and kept the geopolitical risk premium elevated across asset classes.

The index is trading at 7,041 in early Friday action, up 0.26% from Thursday’s close, with the Nasdaq adding 0.36% and the Dow gaining 0.24%. Oil has retreated sharply from yesterday’s highs — WTI is back below $90 at $89.93, while Brent has eased to $92.81, both well off the $93+ levels that had investors on edge just 24 hours ago. The ceasefire, while temporary, has taken some heat out of the Strait of Hormuz narrative that powered crude’s recent surge.

Earnings remain in focus: TSMC delivered a record-breaking quarter overnight, but its shares are down 3% in the classic “sell the news” trade. Netflix has largely recovered from its after-hours plunge following a Hastings-related announcement, and China’s Q1 GDP beat at 5% is providing a tailwind for global growth sentiment. It’s a packed morning — here’s the full lay of the land.

Pre-Market Snapshot

Overnight Developments

Israel–Lebanon Ceasefire: The Catalyst

Late Thursday evening, Israel and Lebanon formally agreed to a ten-day ceasefire, the first meaningful pause in hostilities since the broader Iran conflict intensified in early March. While the deal does not directly resolve the Strait of Hormuz shipping disruption — which remains the primary driver of elevated crude prices — it signals willingness to negotiate and opens a diplomatic window that markets have been starving for.

Futures jumped on the news, with S&P 500 e-minis adding roughly 20 points overnight. The response in oil was equally telling: WTI dropped from the $93+ levels seen Thursday afternoon to below $90 by Asian market hours. Brent, which had been flirting with $100, settled at $92.81. The ceasefire is temporary and limited in scope, but the message to the market is clear — the escalation spiral may have a ceiling.

TSMC: Record Profit, Stock Sells Off

Taiwan Semiconductor Manufacturing reported Q1 2026 results that exceeded expectations on every metric: revenue of $35.9 billion, a 6.4% increase from the prior quarter, and net income surging 58% year-over-year — the company’s fourth consecutive record quarter. TSMC also raised its capital expenditure plan to $56 billion for the year, underscoring its confidence in sustained AI infrastructure demand.

Despite the stellar numbers, TSM shares are trading down 3.1% at $363.35 in early Friday action. The culprit appears to be the higher capex guidance — investors worry that spending this aggressively could pressure margins in future quarters. CEO C.C. Wei noted the company has seen no disruption to operations from the war and cited “solid AI demand” across all major customers. The sell-the-news reaction is frustrating for bulls, but it follows a stock that had already run up sharply heading into the print.

Netflix: After-Hours Plunge Reversed

Netflix’s Q1 earnings beat Wall Street estimates on both revenue and subscriber metrics, extending a streak of strong operational execution. However, the stock plunged roughly 8–9% in after-hours trading Thursday on two headwinds: a disappointing forward guidance outlook and an announcement related to co-founder Reed Hastings that spooked investors. The details of the “Hastings announcement,” as Barron’s titled it, appear to involve a leadership-related strategic shift that investors need time to digest.

Notably, NFLX has recovered much of those after-hours losses heading into Friday’s regular session, trading at $107.79 — essentially flat from Thursday’s close of $107.71. The ceasefire rally appears to have lifted all boats, and dip buyers have stepped in aggressively. Analyst targets remain largely supportive: Guggenheim maintains a Buy with a $130 target, Keybanc recently raised to $115, and Goldman Sachs upgraded to Buy with a $120 target just last week.

China GDP Beats at 5%

China’s Q1 2026 GDP came in at 5.0%, beating consensus expectations and demonstrating resilience in the face of global trade uncertainty. The details were constructive: exports surged 14.7% year-over-year, industrial output rose 5.7%, and the broader picture suggested a manufacturing-led recovery gaining traction. The data helped lift Asian markets overnight, with Japan’s main index touching a record high, South Korea’s index up 50% year-to-date, and Taiwan’s benchmark gaining 17% YTD.

Global Markets

Asia rallied broadly on the ceasefire news and China’s GDP beat. Japan’s Nikkei equivalent touched fresh record territory, boosted by export-oriented names benefiting from a weaker yen and strong Chinese demand. South Korea and Taiwan continued their impressive 2026 runs, with semiconductor names leading both markets.

Europe opened higher, with the FTSE 100 trading at approximately 10,588 (+0.27% from Thursday). The Stoxx 600 added to gains as energy stocks eased on lower crude prices and luxury names rallied on China growth optimism. The euro strengthened to 1.1784 against the dollar, reflecting broad USD weakness.

Macro and Rates

The 10-year Treasury yield sits at 4.28%, roughly unchanged on the session, while the 2-year is at 3.76%. The 2s/10s spread stands at +54 basis points, maintaining the positive slope that has characterized the curve since the steepening move in February. Schwab’s Collin Martin noted this week that the Fed is expected to stay on hold for several meetings, with the 10-year “likely to remain in the 4% to 4.5% range over the short run.”

CME FedWatch tool data shows a near-98% probability of a pause at the May meeting, with the odds of at least one cut by year-end sitting near 35%. The ceasefire should, at the margin, reduce inflation expectations by easing oil prices — but the Fed will want to see sustained data before making any moves.

The dollar index (DXY) is at 98.19, continuing its recent weakness. Gold is slightly softer at $4,807 as the risk premium eases, pulling back from the $4,842 level seen Thursday. Bitcoin is steady near $75,270, consolidating in a range after touching $76,000 earlier in the week.

Corporate News

Earnings Movers

Abbott Labs (ABT) is sinking 4% in early trading after Q1 earnings topped estimates but the company issued second-quarter and full-year guidance below Wall Street consensus. The weaker outlook overshadowed what was otherwise a clean beat on both the top and bottom lines.

PepsiCo (PEP) continues to rally, up 2.3% at $158.38, extending Thursday’s post-earnings momentum. The company reaffirmed full-year guidance for 2–4% organic revenue growth, and notably reported that U.S. food business volume rose for the first time in two years following strategic price cuts.

JB Hunt Transport (JBHT) added roughly 1% after topping analyst estimates. The trucking company acknowledged that high fuel prices have had an impact but characterized them as a temporary problem rather than a structural headwind.

Analyst Actions

• STMicroelectronics (STM) upgraded to Outperform from Neutral at Mizuho
• Texas Instruments (TXN) upgraded to Neutral from Underperform at Mizuho
• Mobileye (MBLY) price target lowered to $8 from $11 at Mizuho
• Woodward (WWD) initiated at Outperform with a $450 target at RBC Capital
• Newmont (NEM) downgraded to Sector Perform from Outperform at National Bank
• Pony AI (PONY) initiated at Buy with a $30 target at Goldman Sachs

Other Corporate

Live Nation (LYV) is slipping another 1.5% today after Wednesday’s steep 6% decline following a jury verdict that the company operated a monopoly in the ticketing market. The case, brought by 33 states and Washington, D.C., could force divestitures and damages.

Tesla (TSLA) is down 0.8% at $388.90 after yesterday’s massive 7% rally on CEO Elon Musk’s update about progress on the A15 chip. The stock is nearing its 200-day moving average near $398. Tesla reports earnings next week.

Microsoft (MSFT) is the standout mega-cap this morning, rallying 2.2% to $420.26. The move comes amid renewed AI infrastructure optimism and a Barron’s feature on hyperscaler purchase obligations topping $640 billion, underscoring the scale of the build-out cycle.

Pre-Market Movers

Sector Breakdown

The sector tape is somewhat unusual for a risk-on session. Energy is leading at +1.47% even as oil retreats — suggesting traders view the pullback from $93 as a buying opportunity rather than a signal to exit. Technology and communication services are strong, driven by MSFT, META, and the broader AI narrative, while healthcare lags on the Abbott disappointment. The four losing sectors — financials, discretionary, industrials, and healthcare — continue the pattern of narrow leadership that emerged earlier this week, with only seven of eleven sectors in the green.

Economic Calendar

Today’s housing data will be closely watched. Mortgage rates remain elevated with the 30-year hovering around 7%, which continues to weigh on construction activity. A miss here could feed the “housing recession” narrative, while an upside surprise would reinforce the broad economic resilience story. Earnings on tap today include Truist Financial (TFC), Fifth Third Bancorp (FITB), and State Street (STT) — all regional and custodial banks that will provide additional color on lending conditions and deposit trends.

The AlphaEdge Prediction

Base Case (65% probability): S&P 500 finishes in the 7,020–7,080 range. The ceasefire provides a sentiment floor, and the risk-on tone in futures should carry into the session. However, overbought RSI near 70 and narrow breadth limit upside conviction. Look for a quiet grind higher with modest volume as traders position ahead of the weekend. Energy and tech remain the day’s leaders.

Bull Case (20% probability): A strong housing data print combined with continued ceasefire optimism pushes the S&P above 7,080 toward 7,100. If the TSMC sell-the-news trade reverses and Netflix stabilizes, the mega-cap complex could carry the index to new intraday highs. Oil continuing below $90 would add fuel.

Bear Case (15% probability): The ceasefire proves fragile or new Hormuz headlines emerge, sending oil back above $93 and reversing the overnight futures rally. Weak housing data combines with Abbott’s guidance miss to reignite growth fears, pushing the index below 7,000 to test the 6,960–6,980 support zone. VIX could spike to 20+ in this scenario.