SOTS 2nd Hour: Stocks Pop, Oil Drops - The Iran War Playbook & What Comes Next 5/6/26

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Sara Eisen (1:03)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber. We are live as always from Post 9 of the New York Stock Exchange. Stocks jumping to record highs here. Oil sinking after Naxos report said an Iran deal could be coming soon. We'll talk to Richard Haas from the Council on Foreign Relations about what could come next in the Middle East. And AMD boosting the tech complex on the back of blowout results as the NASDAQ sits at these record levels. The top portfolio manager weighs in on how long this tech rally can last. And Disney shares are also higher following the first earnings report under the new CEO, Josh Demaro and one analyst thinks there's a lot more upside on this one ahead. But guys, we have to start on the moves off of the de-escalation hopes from Iran. It is far and wide. I think you have to start with oil and gas prices, which you can see in the 24-hour chart had a steep plunge on this idea that there is a formal memo out from the United States for Iran to consider toward ending the war and opening importantly the Strait of Hormuz. Big drop in oil prices. We're obviously off the lows, but we're still looking at six, six and a half percent declines.

That's relief. And you see that in treasury yields as well, which has been another key place that investors are focused on. High yields with high oil prices. That goes the other way today as well. Lower yields, some relief there. I mean, it is far and wide. You can just look at the currency market as well, where the dollar shekel saw a one percent move there. That's the Israeli currency on the back of this strong shekel on hopes of ending the war. So just a few places where you can see some sharp market moves, guys. We also see it in the fertilizer stocks, which are selling off. Remember, high fertilizer prices because they get imported from that part of the region. They've been stuck in the Strait of Hormuz. That's boosted prices and stocks here that trade in the US. Some of these big fertilizer prices companies. You see the relief today. It's been interesting to follow the trade, Carl and David, because market overall has been pretty resilient, but you see in these pockets where the war risks have really been priced in, in terms of high fertilizer, high oil and gas prices, higher treasury yields than we might have otherwise had. So there's still scope for an unwind.

Yeah.

Carl Quintanilla (3:23)

And it'll be, it's not like this, even if hostilities and the straight were to open today, it's not like any of this gets cured automatically. QSR is a good example where their beef costs are up 20% year on year, and they don't really see relief on that front probably till we get into 27 So some of these, there'll be an echo to all of this.

Sara Eisen (3:42)

Right. And that's the question, I think, you know, coming out of the milk and conference day, but I think one of the big questions that we were hearing debated, and there are different views on this, is just how deep of an inflation problem do we have right now? And how persistent of an inflation problem do we have right now? Is it all going to reverse when the war is over and oil prices come back down? Or are we looking at something more sustained? It is something I talked with Ken Griffin about of Citadel yesterday. He said it's going to be very hard for the Fed to do anything this year. And here's what he said about the war in general.