NEW YORK — A geopolitical jolt from Tehran is doing what a blowout Nvidia quarter couldn’t prevent: dragging U.S. equities lower at midday, with oil pushing toward $98 a barrel and erasing Wednesday’s optimism about a potential Iran nuclear deal.
The Tape Turns on Tehran
Wednesday’s session closed on a constructive note — the S&P 500 gained 1.08% to 7,432.97, the Dow added 1.31%, and the Nasdaq surged 1.54% — largely on hopes that U.S.-Iran nuclear negotiations were progressing. Thursday morning reversed that narrative in a single Reuters headline.
Reuters reported that Iran’s Supreme Leader issued a directive prohibiting the export of the country’s near-weapons-grade enriched uranium, a demand that U.S. negotiators had reportedly been counting on as a central concession in any framework agreement. The directive instantly complicated the diplomatic calculus and sent crude oil futures climbing sharply. West Texas Intermediate futures traded near $98 per barrel at midday, a level that represents both a technical resistance zone and a psychological threshold that investors have not had to price since earlier in the year.
The connection between oil and equities is not incidental — it’s mechanistic. Higher crude pressures transportation, manufacturing, and consumer discretionary sectors simultaneously, while also providing the Fed with an argument against rate cuts. As we covered earlier this week, it was the prospect of an Iran deal that was doing more for stocks than Nvidia — and today’s session is proving exactly that thesis in reverse.
Nvidia Beat Everything — And the Market Sold It Anyway
Nvidia posted Q1 FY2026 results that, by any conventional measure, should have propelled the stock higher. Revenue of $81.62 billion surged 85% year over year, clearing the $78.86 billion LSEG consensus. Adjusted EPS of $1.87 beat the $1.75 estimate. The company raised its quarterly cash dividend to 25 cents and issued guidance that exceeded analyst targets.
Shares fell more than 1% anyway.
That reaction is not irrational — it’s instructive. Nvidia has conditioned the market to expect beats of this magnitude, and in doing so, it has raised the implicit bar well above what analysts formally model. A beat of roughly $3 billion on the top line and 12 cents on EPS is no longer a catalyst; it’s the price of admission. For the stock to move meaningfully higher on earnings, Nvidia would need to either shatter those unwritten expectations or provide a forward data point — a specific hyperscaler order, a new chip ramp timeline, a margin expansion surprise — that resets the growth trajectory in investors’ minds.
None of that materialized Thursday. The result: a technically strong quarter that reads, in market terms, as in-line. Traders who were already questioning whether Nvidia’s $78 billion quarter justified current valuations got their answer — at least for today.
The Standout Movers: Lilly Gains, Walmart Bleeds, Quantum Erupts
Eli Lilly (LLY) was among the session’s clearest winners, rising 1.05% after the company announced that its next-generation obesity drug, retatrutide, cleared a Phase 3 late-stage trial. Results showed patients in the highest-dose group lost 28.3% of body weight — averaging 70.3 pounds — over 80 weeks, compared to 2.2% for placebo. About 45% of the roughly 2,500 trial participants achieved 30% or greater weight loss. Retatrutide works through a different mechanism than existing GLP-1 treatments from both Lilly and Novo Nordisk, potentially expanding the addressable market rather than simply competing within it.
Walmart (WMT) told a different story. Shares fell nearly 2% after the retailer reiterated its fiscal 2027 full-year outlook — adjusted EPS of $2.75 to $2.85, net sales growth of 3.5% to 4.5% — a guidance range that already disappointed investors when it was first issued last quarter and disappointed again Thursday. The $2.91 LSEG consensus was not met. Q1 revenue of $177.75 billion, up 7.3% year over year and slightly ahead of estimates, provided little comfort when the composition of that revenue growth was examined: strength was concentrated in groceries and household essentials, not discretionary categories. That distinction matters. Necessity-driven spending does not point to a healthy consumer; it points to one who has narrowed their purchasing to non-negotiables.
The quantum computing sector was the session’s loudest story by percentage. D-Wave Quantum (QBTS) surged 18%, Rigetti Computing (RGTI) soared 15%, and IonQ (IONQ) jumped 8.3%, following reports that new U.S. government agreements — reportedly including equity stakes for federal agencies — signal an acceleration of the Trump administration’s push into the sector. For context on the broader policy architecture behind these moves, see our earlier analysis on whether Washington’s $2 billion quantum bet is its most aggressive market move yet.
Where Sectors Stand at Midday
The sectoral picture at 1:30 PM ET reflects a market under geopolitical pressure but not in a full risk-off posture. Energy is the clear outperformer, benefiting directly from the oil spike driven by the Iran directive. Healthcare is holding ground, boosted by the Lilly catalyst. Technology is the principal drag, pulled lower by Nvidia’s post-earnings fade and the broader weight of higher crude on margin expectations.
Consumer staples are under pressure from Walmart’s guidance miss, which is notable because staples are supposed to be the defensive corner of the market. When the sector’s largest constituent issues a below-consensus outlook, the damage extends beyond one stock — it signals that even the defensive posture has limits in this environment. The Russell 2000’s near-flat session — up just 0.01% — is the one genuinely interesting data point in the index matrix. Small caps are neither fleeing nor following. That neutrality, given the oil and macro headwinds, may actually reflect underlying resilience or it may simply reflect that small caps have less geopolitical sensitivity at the top-line level. The labor market’s role in supporting small cap earnings will matter increasingly if this oil move persists.
What the Close Needs to Confirm
The afternoon session carries three variables that will determine whether today reads as a healthy consolidation after Wednesday’s gains or the start of a more durable reversal. First, WTI crude at $98 per barrel needs to be watched for any attempt at $100 — a round-number psychological level that would likely trigger systematic selling in consumer discretionary and transportation names. Second, the S&P 500’s 7,400 level is the line between managed pullback and technical deterioration. Third, any update on Iran nuclear negotiations — whether a U.S. response to the Supreme Leader’s directive or a diplomatic channel statement — could move the tape faster than any earnings data point in the afternoon hours.
Nvidia’s after-close reaction in extended trading will also be monitored, though the damage to sentiment has largely been assessed. The more pressing question is whether the broader market has finished repricing the Iran premium or is still in the process of doing so. Given that a $5 oil move has historically done more to shift the tape than most earnings beats, the directional answer to today’s session may come from a pipeline, not a balance sheet.
| Level / Event | Value | Signal |
|---|---|---|
| S&P 500 support | 7,400 | A close below this level would signal sellers are in control; hold above confirms consolidation |
| WTI Crude resistance | $100 / bbl | Break above $100 would force a re-pricing of rate-cut timelines and consumer spending assumptions |
| Nvidia (NVDA) midday | -1%+ | Post-earnings fade on a massive beat signals the AI premium is fully priced at current levels |
| Walmart (WMT) FY27 EPS guide | $2.75–$2.85 | Below $2.91 consensus — discretionary demand weakness is structural, not a one-quarter anomaly |
| Iran diplomatic update | Pending | Any statement softening the uranium export block could reverse oil gains and lift the tape sharply into the close |
The afternoon setup is asymmetric in an uncomfortable way: the upside case requires a diplomatic reversal that has no current signal, while the downside case requires only crude to keep climbing. Traders who stayed long through Wednesday’s relief rally are now managing a position that looked prescient 24 hours ago and looks fragile now. The tape is not broken — but it is no longer being led by earnings. Tehran is in the driver’s seat for the rest of this session, and that is not a comfortable place for equity bulls to be.
This article is published by PreMarket Daily for informational purposes only. Nothing here constitutes financial advice, investment recommendations, or an offer to buy or sell any securities. Always consult a qualified financial professional before making investment decisions.
