U.S. stock index futures for the S&P 500 and Nasdaq 100 hovered near the flatline, with Dow Jones Industrial Average futures also trading largely unchanged. As of the latest update, Dow futures were up 0.08%, S&P 500 futures rose 0.03%, and Nasdaq futures dipped 0.05%.

In premarket trading, Broadcom stood out with a gain of over 2%. This followed an announcement from Meta Platforms regarding an expansion of its collaboration with Broadcom, planning to utilize the latter's technology for deploying custom chips.

In the previous trading session, the S&P 500 advanced 1.2%, the Nasdaq Composite climbed 2%, and the blue-chip Dow Jones surged more than 300 points. The S&P 500 is now approaching the all-time high of 7,002.28 points set on January 28th. Tuesday marked the index's ninth gain in ten trading sessions, while the tech-heavy Nasdaq registered its tenth consecutive day of increases. Monday's rally for the S&P 500 fully erased all losses incurred since the escalation of U.S.-Iran tensions in late February.

Market gains have been fueled by investor expectations of a potential agreement between the U.S. and Iran. On Monday, former President Donald Trump stated, "The other side has reached out to us; they are very eager to make a deal." On Tuesday, a White House official informed CNBC that discussions about a second round of talks are underway, though no formal schedule has been set. The official requested anonymity to discuss internal administration plans. In an interview with Fox Business, Trump remarked that the conflict with Iran was "nearing its end," reiterating that Iran is "very eager to make a deal," offering hope that hostilities might not prolong.

"I don't believe the conflict is over, and the market still harbors numerous concerns," said Brent Schutte, Chief Investment Officer at Northwestern Mutual Wealth Management, on Tuesday. "That said, I think there are still substantial long-term opportunities for investors... Investors are now returning to their favored assets. I believe the future opportunity, especially for medium to long-term investors, lies in sectors that have underperformed during the narrow market trends of the past few years."

Yellen and Goldman Sachs Reinforce the Fed Rate Cut Narrative. Currently, swap markets and rate futures have fully priced out expectations for Federal Reserve interest rate cuts within the year, with some traders even beginning to price in the possibility of a rate hike by the end of 2026. However, former U.S. Treasury Secretary Janet Yellen suggested that, despite the shadow cast on the U.S. and global economic outlook by the significant oil price surge triggered by Middle East geopolitical conflict, she still believes there is a possibility for the Fed to restart rate cuts later this year. Yellen stated, "This is essentially a broad supply-side shock, not another episode of runaway inflation." While not completely ruling out the potential need for rate hikes, Yellen noted that long-term inflation expectations remain stable, indicating that such an extreme scenario remains unlikely for now.

Similarly, an economics team at Goldman Sachs judged that the current price shock resembles a mild stagflation scenario, insufficient to trigger a repeat of the 2022-style inflation surge. Consequently, they maintain their expectation for 25 basis point rate cuts in both September and December.

Hedge Funds Capitalize on a "Dollar Squeeze." As prospects for renewed U.S.-Iran negotiations and the possibility of a peace agreement increase, bearish sentiment towards the U.S. dollar among hedge funds is intensifying. The dollar's previous strength, accumulated due to war-related safe-haven flows, has now been almost entirely erased. A proprietary trading model from Morgan Stanley indicated that as of April 10th, investors had been increasing bearish bets against the dollar throughout the month. Concurrently, the so-called risk reversal indicator for the U.S. Dollar Index showed that the premium for call options (hedging against dollar strength) relative to put options (betting on dollar weakness) has narrowed significantly this month.

Morgan Stanley analysts commented, "The path for a weaker dollar is broadening, not narrowing." "In the short term, a ceasefire agreement could benefit risk-sensitive currencies. But from a medium to long-term perspective, we believe dollar weakness will be more concentrated in its exchange rates against major non-U.S. currencies like the Euro, Japanese Yen, and Swiss Franc."

Is a U.S. Software Stock Rebound Beginning? After months of sustained weakness and historic valuation compression, the U.S. software sector experienced a strong rebound this week. Previous sell-offs, partly driven by AI-related concerns, had pushed software stock valuations to historically rare lows. Besides attractive valuations, marginal improvements in profit expectations are also driving capital back into the sector. Industry research data shows that Wall Street analysts have quietly raised their forecasts for the software sector, now projecting profit growth for software and service companies to reach 16.5% by 2027, up from the 15.7% forecast at the end of February. Revenue expectations have followed a similar upward revision trajectory.

However, given the numerous challenges facing the software industry, such as slowing revenue growth and the rapid advancement of AI (where each update seems to promise leaps in capability), many investors remain cautious about buying the dip in software stocks.

BofA Survey: Investors Shed Fear of High Valuations! According to the Bank of America's April Global Fund Manager Survey, investor concern over U.S. stock valuations has dropped to its lowest level since February 2019, signaling a shift in the multi-year anxiety surrounding high-priced stocks. Concurrently, the S&P 500 has fully recovered losses triggered by geopolitical tensions (Iran situation) and now sits merely about 1% below the 7,000-point all-time high recorded on January 28th. This change suggests that some of the accumulated excess valuation worries from past years are gradually dissipating amid the geopolitical conflict and the "higher-for-longer" borrowing cost environment.

Stocks in Focus Snap shares surged over 10% premarket after announcing plans to reduce its global workforce by approximately 16%. Broadcom gained nearly 3% premarket following the establishment of a multi-year AI chip partnership with Meta. Morgan Stanley rose over 2% premarket after reporting better-than-expected fiscal first-quarter results. Nike advanced 2.6% premarket as both Apple CEO Tim Cook and Nike's President increased their share holdings. Cloudflare climbed 3.6% premarket after announcing a collaboration with Wiz and launching a new product, Cloudflare Mesh. GitLab jumped over 5% premarket on news of deepening its strategic collaboration with Google Cloud. TeraWulf fell over 5% premarket due to a significant stock offering diluting equity. Cincinnati Financial declined 7% premarket after Bank of America slightly lowered its price target, expressing near-term caution. Blue Owl Capital continued its rise, gaining over 1% premarket, after Pimco purchased $4 billion worth of its private credit bonds. Arrive AI plummeted over 27% premarket after announcing the need to restate financial reports for two quarters in 2025. Taiwan Semiconductor Manufacturing Company's U.S.-listed shares rose another 1.6% premarket. If this gain holds into the regular session, its market capitalization is poised to once again surpass $2 trillion.