If you noticed early Thursday that the Strait of Hormuz remained effectively closed, and all sides were disagreeing on the terms of Tuesday’s cease-fire, and read about the largest attack on Lebanon since the U.S.-led war on Iran began in February—you might reasonably think the conflict was still ongoing. 

The fragile truce—which on Wednesday sparked the largest single-day rally in U.S. stocks since last year’s Liberation Day rebound—is already fraying around the edges, and that’s taking some steam out of the market’s newly revived risk engine. 

Oil is back on the march, with Goldman Sachs warning that global prices will likely average more than $100 a barrel throughout the whole year, and stocks are set to give back some of Wednesday’s historic gains.

Rate traders, meanwhile, are digesting minutes of the Fed’s March policy meeting, in which a growing number of officials said war-related inflation might compel the need for interest-rate hikes before the end of the year. 

Hopeful signs are still emerging from the Gulf, however, as the U.S. and Iran plan their first direct talks for this weekend in Pakistan, and Tehran has halted strikes on targets in and around the region despite the escalation of military activity in Lebanon.

But with President Donald Trump keeping troops and ships in the region, and Iran insisting on cease-fire terms the White House says don’t exist, markets are right to exchange Wednesday’s euphoria for something a bit more guarded.

—Martin Baccardax

Get more of the journalism you love. Choose Barron’s as a preferred source in Google.

Federal Reserve officials have warned that prolonged conflict in the Middle East could force them to raise interest rates, according to their March 17-18 meeting minutes. If oil prices keep climbing, rate increases might be needed to pull prices back to the Fed’s 2% target, they said.

• The vast majority of participants said risks had increased on both sides of the Fed’s mandate: Inflation was threatening to stay too high, while the job market was showing signs of vulnerability. Nearly all members voted to keep interest rates steady instead of cutting or raising.

• The minutes reflect a hawkish tone. Some participants wanted to explicitly signal in the Fed’s postmeeting statement that rate hikes remained on the table, and the vast majority agreed that getting inflation back to 2% could take longer than previously hoped.

• Since the war began on Feb. 28, borrowing costs have risen and markets have sold off, tightening conditions without the Fed having to act. Rising bond yields, falling stock prices, and a stronger dollar are all acting as a brake on the economy, Santander’s chief U.S. economist Stephen Stanley noted.

• U.S. crude futures plunged on Wednesday on news of a two-week cease-fire to allow safe passage through the Strait of Hormuz, but prices remain well above prewar levels. Analysts cautioned that a short-lived pause is far from a lasting resolution.

What’s Next: Fed Chair Jerome Powell and several Fed colleagues have warned that if prices stay elevated long enough, people may start expecting them to stay that way, which makes bringing inflation back down far harder. Virtually everyone expects Fed officials to keep rates steady at the April 28-29 meeting.

—Nicole Goodkind and Janet H. Cho

Stock markets reacted enthusiastically to the cease-fire between the U.S. and Iran, but geopolitical strategists are keeping an eye on developments that could upend this fragile truce, including conflicting signals from both sides. Some see the U.S. as unlikely to jump back in and escalate the conflict further.

• Strategists note a still-wide gulf between Iran’s 10-point plan for an off-ramp and what the U.S. has wanted, which is why many are looking beyond what is being said to what’s happening in the region, including what’s passing through the Strait of Hormuz—and at what cost.

• Analysts at Dragonfly, a risk analysis and security intelligence service owned by Barron’s parent, Dow Jones, point to additional potential risks to the cease-fire, including if President Donald Trump publicly suggests Iran isn’t negotiating in good faith or issues an ultimatum to reach an agreement or face renewed attacks.

• Matt Gertken from BCA Research favors owning oil and natural gas exchange-traded funds, energy stocks in North and South America, and renewable energy and materials stocks if the cease-fire collapses. Ulrike Hoffmann-Burchardi at UBS Global Wealth Management, advises clients to slowly derisk portfolios the longer oil prices remain elevated. 

• Her team is also becoming cautious on stock markets in Europe and India, which are more sensitive to energy disruptions. Henrietta Treyz at Veda Partners, is keeping tabs on House and Senate votes concerning next week’s war power resolution.

What’s Next: Further de-escalation of tensions that allow for more shipments to pass through the Strait of Hormuz is a positive for Asian economies reliant on exports of chemicals and energy from the Persian Gulf. But oil and gasoline prices are likely to stay elevated. For more on this read here.

—Reshma Kapadia

Meta Platforms has released its first artificial-intelligence model in more than a year, and the first since it formed its superintelligence group. The model, called Muse Spark, is an example of proprietary AI, meaning its architecture, source code, and training data are concealed from the public by developers.

• Muse Spark marks a departure from Meta’s previous releases, which were open source. The company said it doesn’t currently have plans to release the model more broadly. Meta said it’s the first product of what it called a “ground-up overhaul.”

• The rollout ends weeks of uncertainty since a report that Meta had delayed the release of its coming AI model after it failed to outperform similar programs from rivals. Muse Spark is competitive with models from Anthropic, Google, and OpenAI, from agentic coding to multidisciplinary reasoning, Meta said.

• The release could signal a shift after the underwhelming debut of its last open-source model, Llama 4, in April 2025. Meta, like other tech giants, has been fighting to maintain a foothold in the highly competitive AI market. But Muse Spark faces a high bar for success.

• Meta Superintelligence Labs is the division overseen by billionaire entrepreneur Alexandr Wang, who came on board in June 2025. Meta poured $14.3 billion into the company last year, giving it a 49% stake but no voting power. It’s part of Meta’s big hiring spree for AI.

What’s Next: Spark is the first model in the Muse family, CEO Mark Zuckerberg said. In a post introducing it, Zuckerberg said they plan to release increasingly advanced models that push the frontier of intelligence and capabilities, including new open source models.

—Mackenzie Tatananni and Liz Moyer

Companies riding the artificial-intelligence boom are in the spotlight this earnings season. Data-center developer Applied Digital gave an early indication of trends with its earnings report Wednesday, signaling strong demand for AI computing capacity.

• Applied Digital reported its fiscal-third quarter revenue more than doubled to $126.64 million, far exceeding Wall Street expectations of sales totaling $75.5 million. Stripping out one-time items, its adjusted per-share loss was 9 cents, narrower than the 16-cent loss analysts expected, according to FactSet.

• Chief Executive Wes Cummins said demand is continuing to soar from AI hyperscalers. Annual capital expenditures from U.S. hyperscalers have increased to nearly $700 billion from $400 billion three months ago, he said.

• Applied Digital said in January that it was in advanced talks for deals for a total 900 megawatts of power across three sites. Executives told analysts on Wednesday that there were multiple hyperscalers interested in each of its locations but the company is prioritizing customer diversification. 

What’s Next: Expect a heightened focus on regulation for U.S. data centers this year amid concerns about rising electricity costs. Lawmakers in more than 10 states have proposed temporary bans on data-center construction, with Maine poised to become the first state to approve such legislation in the coming weeks. 

—Adam Clark and Kit Norton

Constellation Brands, the U.S. importer of beers including Corona Extra and Modelo Especial, beat fourth-quarter earnings and revenue expectations, but sales and profits are still down from the year-ago quarter. It also issued lower than expected fiscal 2027 guidance on shifting consumer demand.

• Constellation executives acknowledge that demand for beer and wine has been muted. In prepared remarks accompanying the earnings release, they said consumer spending was becoming more deliberate, with an eye toward value “and exhibiting greater selectivity in their purchases.”

• For its fiscal quarter, Constellation reported earnings of $1.90 a share and net sales of $1.92 billion, down 11% from a year ago. Beer sales during the quarter increased 1% to $1.73 billion, while wine and spirits sales fell 58%. Constellation has sold some wine brands.

• Demand for beer, wine, and spirits has softened in recent years, as economic worries have curbed group gatherings and reduced convenience store visits. Hispanic consumers, who comprise roughly half of its beer customers, have been especially affected by immigration raids and weaker spending.

• For full-year fiscal 2026, Constellation reported earnings of $11.82 a share on net sales of $9.14 billion, down 10% from the previous year but above previous projections. Analysts say this summer’s FIFA World Cup matches could boost beer sales and consumption.

What’s Next: For the full fiscal year that ends in February 2027, Constellation expects earnings of $11.20 to $11.90 a share. It expects beer sales to see a range, from down 1% to up 1%, and the same for wine and spirits. It withdrew forecasts for fiscal 2028.