Wall Street’s main indexes gained in choppy trading on Monday after logging sharp declines in the previous session, as investors took heart from US President Donald Trump’s comments on US-Iran talks even as the Middle East conflict widened. Oil prices hovered just below $115 (€100) a barrel for Brent crude.
Trump said the US was in serious discussions with a “more reasonable regime” to end the war, but repeated his warning to open the Strait of Hormuz or risk US attacks on Iranian oil wells and power plants.
The comments came after Yemen’s Iran-backed Houthi militia entered the war over the weekend, escalating the conflict.
The S&P 500 Energy Index added 1.5 per cent with Exxon Mobil and Chevron up 3 per cent and 1.5 per cent, respectively.
“The S&P 500 is still down less than 10 per cent (since the war began). In many ways, investors have been affected less by the implications of the Strait of Hormuz being closed than I would have thought,” said Sam Stovall, chief investment strategist at CFRA Research.
“Today’s action is probably more of a technical bounce because many sectors and sub-industries are in oversold condition.”
The financial index gained 0.8 per cent after the US Department of Labor issued long-awaited guidelines intended to clarify how trustees can add alternative assets ranging from private equity to cryptocurrencies to 401(k) retirement plans.
Shares of asset managers climbed with Blackstone up 1.7 per cent, KKR up 1.4 per cent and Apollo Global Management gaining 1%.
Nine out of the S&P 500’s 11 major industry sectors were in the green.
Since the war began, the blue-chip Dow, the Nasdaq and the small-cap Russell 2000 have all confirmed correction territory.
Wall Street brokerage Morgan Stanley downgraded global equities to “equal weight” from “overweight”, but said fund flows to U.S. equities and bonds had overtaken the rest of the world since the conflict began, indicating it might re-emerge as a safe haven for investors.
In early trading the Dow Jones Industrial Average rose 216.19 points, or 0.48 per cent, to 45,382.83, the S&P 500 gained 20.46 points, or 0.32 per cent, to 6,389.31 and the Nasdaq Composite gained 39.52 points, or 0.19 per cent, to 20,987.88.
European stocks clawed back some ground as earlier shares across Asia, a region more reliant on Gulf oil exports, fell, with Japan’s Nikkei index closing down 2.8 per cent.
Investors will closely monitor comments from Fed chair Jerome Powell and New York Fed President John Williams, scheduled to speak later in the day.
A slew of labor market data, including the nonfarm payrolls figures for March, is scheduled for release this week and expected to provide more insight into the health of the economy.
The spike in oil prices resulting from the Iran conflict has revived inflation fears, prompting money market participants to price out any easing from the Federal Reserve this year, compared with two cuts expected before the war began, per the CME Group’s FedWatch Tool.
Among other movers, Sysco’s shares dropped 12 per cent after the food distributor said it would buy catering supplier Jetro Restaurant Depot in a $29 billion deal, including debt.
Shares of aluminum producers climbed as prices of the metal were trading at around four-year peaks. Alcoa and Century Aluminum gained 12 per cent and 13.6 per cnet, respectively.
US markets will be closed on Friday for the Good Friday holiday. - Reuters
