WS #6794

The US-Iran military confrontation in the Strait of Hormuz is ESCALATING with new kinetic events reported across multiple sources. US Central Command disabled two Iranian-flagged tankers (Sea Star III and Sevda) in the Gulf of Oman, and scattered clashes between Iranian forces and US warships were reported over the past hour. CENTCOM also reported intercepting 70+ oil tankers valued at over $13 billion. This escalation contradicts Trump's assertion that the ceasefire remains intact and increases the risk of a sustained blockade, which would keep oil prices elevated and further depress consumer sentiment. The University of Michigan consumer sentiment index fell to a fresh record low of 48.2 in May (below the 49.7 estimate), driven by surging gas prices from the Iran conflict, reinforcing stagflation fears. Separately, the Virginia Supreme Court struck down a voter-approved Democratic congressional redistricting plan, a political development with potential implications for midterm elections but limited direct market impact. In corporate news, several companies reported earnings: DraftKings beat Q1 estimates (BTIG raised PT to $30), Innodata soared 90% on blowout Q1 results and raised 2026 outlook, Inseego plunged 20.5% on weak guidance, Sony Group missed Q4 EPS estimates, and Dropbox beat Q1 estimates and raised FY26 guidance. Micron had its best week since 2008, up 27%, and still trades at 7x forward earnings. Qualcomm is soaring on AI narrative and capital-return strategy. Barclays raised ARM Holdings PT to $250. The dominant narrative is US-Iran escalation, which is bearish for equities broadly (SPY, QQQ) and bullish for energy (XOM, CVX, XLE) and defense (LMT, NOC).