US stocks' "canary in the coal mine" is wailing! The danger signals of the earnings season have been obscured by historic highs.

The US stock market has repeatedly reached new highs, indicating that Wall Street has largely overlooked the volatility of the situation in Iran, but the situation of individual stocks outside the technology sector is not the same. In late April 2026, Wall Street once again witnessed a historical moment: the S&P 500 index closed at 7165 points last Friday, and the Nasdaq index climbed to 24837 points, both setting new closing records. This is not the first time this month - since the end of March, the Nasdaq has set a record of rising for 13 consecutive trading days, equaling the longest consecutive increase since 1992. The core engine driving this uptrend is still large-cap tech stocks. Intel Corporation (INTC.US) surged 23.6% in a single day on better-than-expected second-quarter revenue guidance, driving the entire AI hardware sector to erupt, with AMD (AMD.US) up 13.9%, and Qualcomm (QCOM.US) rising over 11%. NVIDIA Corporation (NVDA.US) once again surpassed a market value of $5 trillion. There are also more catalysts outside the market: the White House signaled a new round of talks with Iran, and the US Department of Justice terminated its investigation into Fed Chairman Powell, boosting expectations of a rate cut. However, beneath this prosperity, a deep-seated market divide is quietly unfolding. As first-quarter earnings reports continue to be released, more and more evidence indicates that the impact of the war extends far beyond companies transporting goods and people globally. As traders prepare to enter Wall Street's busiest earnings week, there may be more disappointing news to come. Mark Malek, Chief Investment Officer of Siebert Financial, warned: "These are like canaries in a coal mine, currently being ignored by the market as their stock prices continue to soar. I hold a constructive view, but with caution." Here, "canaries" refer to smaller companies directly exposed to the impact of the conflict in the Middle East - their financial reports are gradually revealing the true cost of the war, overshadowed by the stock price frenzy of tech giants. The other side of the US stock market at new highs: pressure on multiple sectors Industrials and Materials: Chain reaction of rising costs. Honeywell International Inc. (HON.US) reported first-quarter revenue of $9.14 billion, lower than analysts' expected $9.28 billion, leading to a pre-market plunge of about 7.7% in the stock price. The company's Process Automation and Technology department suffered a direct impact from the Middle East conflict, with organic sales down 6% year-over-year, and after-sales service revenue sharply declining by 10% due to delays in refining catalyst deliveries and automation service upgrades. Management expects the conflict to further impact revenue from 0.5% in the second quarter to about 1%. Paperboard packaging manufacturer Sonoco Products (SON.US) faces comprehensive raw material price increases. The company achieved adjusted earnings per share of $1.20, flat compared to the same period last year, with revenue of $1.68 billion, lower than the expected $1.71 billion. Management anticipates additional costs of $8 to $10 million in the second quarter related to energy, freight, and petrochemical inputs. Although they have adjusted prices - a $70 per ton increase in the US market and an 80 per ton increase in the European market - there is a lag of about four weeks in price transmission, inevitably putting pressure on short-term profits. Oilfield services giant SLB (SLB.US) suffered a more direct impact. The company's CEO Olivier Le Peuch stated that due to customer requirements to ensure the safety of personnel and facilities, the company had to evacuate staff and stop operations in multiple countries in the Middle East. First-quarter revenue in the Middle East and Asia region declined by 10% to $2.69 billion. "We had expected global liquid supply and demand to gradually rebalance between 2026 and 2027," Le Peuch noted, "but the Middle East conflict has accelerated the rebalancing process and exposed the critical vulnerability of the global energy supply chain." Airlines: Fuel costs devour profits. Southwest Airlines Co. (LUV.US) became one of the most prominent "victims" in this round of impact caused by GEO Group Inc. Due to the cessation of fuel hedging in 2025, the company was almost unprotected against the surge in oil prices. First-quarter fuel costs per gallon reached $2.73, well above the previous guidance upper limit of about $2.40, resulting in an additional $164 million in fuel expenses and dragging down earnings per share by about $0.22. Following the financial report release, the stock price has fallen by about 20% since early March. While GE Aviation (GE.US) exceeded expectations in the first quarter - with revenue growth of 25% to $12.39 billion - management still sounded the alarm. CEO Larry Culp told investors that global flight numbers in the first quarter had dropped to single-digit growth, with high single-digit declines in the Middle East region, and the company had revised its expectations for global flight growth in 2026 from "single-digit growth" to "stable to low single-digit growth." The trend of airlines cutting capacity due to soaring fuel prices will eventually be transmitted to engine manufacturers through a lag effect in maintenance and service demand. Consumer and Tourism: Oil prices "up" on dining and vacation bills. Melissa Brown, Director of Investment Decision Research at SimCorp, was blunt: "The consumer sector is the most vulnerable. Rising oil prices will reduce people's spending on non-essential items because they have to drive, and with the increase in input costs, rising oil prices could also lead to price increases." For example, the situation in the cruise industry is particularly delicate - being both heavy consumers of fuel and highly dependent on consumers' disposable income. Carnival Corporation (CCL.US) has lowered its performance expectations, listing the Middle East conflict as the primary adverse factor, with the stock price falling by about 14% since the outbreak of the war. This makes the market particularly sensitive to the upcoming financial reports of Royal Caribbean Cruises (RCL.US) and Norwegian Cruise Line Holdings Ltd. (NCLH.US). Jack Ablin, Chief Investment Strategy Officer at Cresset Capital, pointed out that luxury goods and hotels are another area where investors may need to lower their expectations. Ralph Lauren Corporation Class A (RL.US), Hilton (HLT.US), and Marriott (MAR.US) will all release financial reports next month - after wiping out all losses during the war, their stock prices are near historic highs. Luxury goods leader LVMH's first-quarter performance has already sounded the alarm: organic growth was only 1% due to the direct impact of the Middle East, with organic sales in the fashion and leather goods division down 2%, falling short of market expectations. The narrative of market division: AI hedging against GEO Group Inc risk Why can the market continue to soar despite such widespread deterioration in fundamentals? Ablin explains: "Currently, the impact of artificial intelligence on the S&P 500 index is much greater than the politics of GEO Group Inc, which is why even companies directly involved in the Middle East are being affected, the index can still maintain stability. The data confirms this assessment. According to FactSet's statistics, the S&P 500's first-quarter net profit is expected to increase by about 12.6% year-on-year, but the tech sector's expected growth rate is as high as 45%, over three times that of the overall market. These trillion-dollar tech giants not only are relatively "immune" to GEO Group Inc's politics - as they don't directly rely on the shipping lanes of the Strait of Hormuz, and energy costs account for a much lower proportion of their total costs compared to industrial and transportation companies - but the momentum of their performance growth is also very strong, enough to "absorb" the weakness in other sectors at the index level. Robert Conzo, CEO of The Wealth Alliance, even believes that regardless of whether breakthroughs can be achieved in the Middle East negotiations, the market has "almost put the conflict aside and chosen to ignore its impact." Ryan Detrick, Chief Market Strategist at Carson Research, also proclaimed that the "bull market has regained dominance," expecting the bull market rally to further accelerate with the progress of earnings season. But this precisely constitutes the core of the risk. The memory of financial markets is often short-lived, while the erosion of the real economy by wars is gradual and cumulative. Wells Fargo & Company had already lowered its year-end target for the S&P 500 from 7800 to 7300 points earlier this month, out of concerns about the impact of the Iran war. The bank's Chief Stock Strategist Ohsung Kwon's latest statement is even more cause for concern: "So far, the impact of the Iran war on the economy has not been significant. Therefore, we believe there will be an overly excessive rise in the market in the next three months. What we are more worried about is the situation in the second half of the year." Kwon's list of concerns is not complicated: the ongoing rise in energy costs is being transmitted step by step through the industrial chain, from raw material companies to manufacturers, from transportation companies to retailers, ultimately reaching consumers. This transmission process has a lag - when companies deplete low-priced inventories, new high-priced procurement contracts take effect, and when consumers begin to cut other expenses due to increased fuel bills, the "second round effects" of the conflict will truly manifest. Nearly two months after the outbreak of the Middle East conflict, the Strait of Hormuz remains effectively closed. Trump emphasized the "urgent need to restore navigation in the Strait of Hormuz" during a call with UK Prime Minister Stammer, but Iran warned on the same day that the waterway "will not return to its previous state under any circumstances." Even if a ceasefire agreement is eventually reached, the reconstruction of some damaged energy infrastructure will take time, and oil prices may not quickly return to previous levels. For investors, the core contradiction in the current market lies in whether the AI narrative of large-cap tech stocks can continue to hedge against the widespread deterioration in fundamentals in the longer term. The "apparent prosperity" of the S&P 500 index relies on highly concentrated market capitalization - the impressive growth of the tech sector is hiding the fact that more and more mid-to-small-cap companies are experiencing profit declines.