As investors grew more optimistic that the Israel-Iran conflict would end soon, U.S. stocks recovered Monday while oil prices fell. The S&P 500 increased by 0.9%, while the Dow Jones Industrial Average increased by 317 points, or 0.8%. With a 1.5% gain, the tech-heavy Nasdaq Composite beat both. After a rough session on Friday, market optimism indicated that traders were feeling more confident.
After Iran’s desire to de-escalate tensions and resume nuclear negotiations was reported by The Wall Street Journal, oil prices, which had been rising over the weekend, fell precipitously. West Texas Intermediate dropped below $72, reversing earlier gains, and Brent crude dropped 1.3% to $73.23 a barrel.
Markets bounce back as investors watch Middle Eastern tension
“The geopolitical risks remain high,” said chief investment officer at Navellier & Associates, Louis Navellier. “But investors have been reminded that geopolitical risks are almost always more bark than bite.”
Gold and other safe-haven assets declined as tensions seemed to subside. After hitting all-time highs last Friday, gold fell 1% to $3,396.40 per troy ounce. The U.S. dollar reduced its previous losses, and Wall Street’s fear gauge, the Cboe Volatility Index (VIX), dropped 8%.
Investors anticipate important updates from the Federal Reserve and global economic leaders despite the holiday shortening the trading week. Japan, Canada, and Mexico are among the nations hoping to influence President Trump’s trade policies at the Group of Seven (G-7) summit in Canada.
Time to wait and see
“Markets are in wait-and-see mode,” said Bill Northey, investment director at U.S. Bank Asset Management Group. “There is a lot of optimism around the potential for trade progress, and whether that manifests in broad deals being announced or positive headlines, that is something that markets are highly attuned to at this point in time.”
After the central bank’s two-day meeting, Fed Chair Jerome Powell is scheduled to speak on Wednesday. Traders will keep an eye out for any indications of potential rate cuts in the future as well as any analysis of the effects of trade policy, even though no change in interest rates is anticipated. U.S. Treasury yields increased slightly in the bond market. After a $13 billion auction of 20-year bonds that attracted strong investor interest, the yield on the 10-year note increased to 4.452%.
Market activity was also stimulated by corporate news. Following Nippon Steel’s resolution of national security issues with the Trump administration, which paved the way for its acquisition, U.S. Steel shares surged 5.1%. Following the approval of a restructuring agreement by creditors, Warner Bros. Discovery saw a 7.3% increase. With the Senate seemingly on the verge of passing the Genius Act, which would allow for more regulation of stablecoins, stablecoin issuer Circle saw a 13% increase in value.
Featured Image Credit: Ahmed akacha; Pexels: Thank You!
