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US STOCKS DIP ON IRAN JITTERS, BUT EARNINGS REMAIN THE LINCHPIN

The S&P 500 .SPX and the Nasdaq .IXIC eased from record highs on Monday, after a stunning rally on Wall Street last week, as renewed U.S.-Iran tensions threatened a ceasefire collapse and dented investor sentiment.

Despite the jitters, Bob Doll, chief investment officer at Crossmark Global Investments, says the broader outlook remains constructive. In his view, markets can absorb short-term volatility as long as investors believe a durable deal will eventually be reached. If that confidence holds, he expects risk assets to grind higher over time.

On inflation, Doll sees the recent uptick in headline figures — driven largely by higher energy prices — as likely to fade. However, he cautions that underlying economic strength could allow inflation to drift higher as growth continues, reducing the likelihood of further rate cuts and potentially pushing bond yields up.

The real driver for markets, Doll argues, is corporate earnings. Whether the strong run in global profits can continue will determine the path forward.

"Our rotation theme out of the U.S. is likely to persist," Doll writes in his latest Deliberations. "But whether that positioning delivers only positive relative returns, or both relative and absolute returns, will ultimately depend on corporate earnings."

With neither monetary nor fiscal policy acting as a meaningful brake, Doll says it is no surprise the global expansion has pushed ahead despite last year's tariff tumult and the current energy shock. But he urges caution — earnings expectations are already elevated and valuations range from "not cheap to expensive." He notes the S&P 500's price-to-earnings ratio peaked near 23 last fall, dropped to 19 during the height of the conflict, and has since climbed back to roughly 22.

(Terence Gabriel)

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