Shares of the iShares Expanded Tech-Software Sector ETF (IGV) slid 1.6% to $83.05 on Tuesday, erasing Monday's relief rally after Iran flatly denied any peace talks with Washington — contradicting President Trump's claims of "productive conversations." Tehran rejected Trump's claims, saying there were no negotiations with the US, according to state-run media. The reversal poses a direct question for software investors: how long can high-valuation growth stocks absorb a war that is rewriting global energy costs?
• Yesterday's Rally Was Built on a Headline, Not a Ceasefire. Stocks rallied Monday after Trump said the U.S. and Iran have held talks and that he was halting strikes on Iranian power plants, giving investors hope the conflict was nearing an end.
The Dow jumped 631 points, the S&P 500 rose 1.15%, and the Nasdaq gained 1.38%. That entire move is now unwinding. Trump said Washington had "productive" conversations with Tehran, but Tehran rejected claims that it had been in contact, saying it was just an attempt to manipulate markets. IGV, down roughly 29% from its 52-week high of $117.99, is whipsawing on diplomacy, not fundamentals.
• $90 Oil Is a Tax on Every Software Customer. Brent crude remains elevated near $100.94 per barrel, while WTI is trading around $91.23. For IGV's top holdings — Microsoft (9.2%), Palantir (9.0%), Oracle (7.8%), and Salesforce (7.5%) — this matters because their enterprise clients face rising input costs. Goldman Sachs warns that in a scenario where crude averages $110 in March and April, U.S. inflation hits 3.3%, and the bank raised its recession odds to 25%. Tighter budgets mean slower software spending.
• Apple's AI Tease Isn't Enough to Change the Mood. Apple confirmed WWDC 2026 will place a strong focus on artificial intelligence, previewing new AI-powered features starting June 8. While this could benefit software developers building on Apple's platforms, the flagship Siri upgrade has been delayed multiple times since 2024 as Apple struggles to get it working properly. A promise three months out doesn't offset oil above $90 today.
• The Real Risk: This Conflict Has No Clear Off-Ramp. Explosions continue to be heard for a 24th day in Iran, Israel, and across several Middle Eastern states.
The war has disrupted oil flows through the Strait of Hormuz, which historically carries about 20% of global oil supply; since February 28, tanker traffic has plunged. With IGV trading at a 48x price-to-earnings ratio — meaning investors pay $48 for every $1 of earnings — any hit to corporate spending or rise in interest rates compresses valuations fast. Until a verifiable ceasefire emerges, software stocks remain hostage to the war desk, not the earnings calendar.