NEW YORK: Wall Street stocks clawed their way back from a steep selloff to close higher on Monday, notching a final-hour rebound after U.S. President Donald Trump suggested that the U.S.-Israeli war on Iran could be close to ending.
All three indexes staged a late comeback after Trump said the war was "very far ahead" of his initial four-to-five-week estimated time frame. Early in the session, oil prices reached their highest levels since mid-2022 due to constricted supply arising from shipping disruptions as the war on Iran entered its tenth day. Ballooning energy prices could metastasize into a broader inflation spike at a time when many U.S. consumers are struggling with affordability. Crude prices fell, however, after sources said the Trump administration is considering easing oil sanctions against Russia.
The stock market's intraday swings as investors digest headlines have added volatility to the trading day in recent weeks.
"There is still an awful lot of uncertainty out there regarding the duration of the conflict, as well as the duration of the closure of the Strait of Hormuz," said Sam Stovall, chief investment strategist of CFRA Research in New York. "Again today, seeing such a relative reversal in price movements indicates that investors are looking for any opportunity to jump back into the equity markets." Those mounting worries, combined with Friday's weaker-than-expected employment report, raise the possibility of economic stagflation, which would trap the U.S. Federal Reserve between the two sides of its dual mandate - price stability and full employment. Still, financial markets largely expect the central bank to keep its key interest rate unchanged through the first half of the year, according to CME's FedWatch tool.
"That weak employment report along with rising energy prices ... speaks to potential stagflation," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. "The Federal Reserve is going to be stuck between a rock and a hard place." Hopes of de-escalation of the widening Middle Eastern conflict had earlier dimmed after Iran selected Mojtaba Khamenei to succeed his father as supreme leader, a choice Trump, who has called for Iran's unconditional surrender, deemed unacceptable.
The Dow Jones Industrial Average rose 239.25 points, or 0.50%, to 47,740.80, the S&P 500 gained 55.97 points, or 0.83%, to 6,795.99 and the Nasdaq Composite gained 308.27 points, or 1.38%, to 22,695.95.
Nine of the 11 major sectors in the S&P 500 ended green, with tech shares enjoying the largest percentage gains. Financials and energy shares were the only two sectors to end the session in negative territory.
The Philadelphia Semiconductor Index bounced back, with chipmakers SanDisk, Broadcom and Nvidia advancing between 2.7% and 11.7%.
Homebuilders, banks, and aerospace/defense stocks were clear underperformers.
On the economic front, later this week, the Labor Department's Consumer Price Index, the Commerce Department's second take on fourth-quarter GDP and its broad Personal Consumption Expenditures report all have the potential to move markets.
Declining issues outnumbered advancers by a 1.06-to-1 ratio on the NYSE. There were 105 new highs and 204 new lows on the NYSE.
On the Nasdaq, 2,645 stocks rose and 2,107 fell as advancing issues outnumbered decliners by a 1.26-to-1 ratio.
The S&P 500 posted 4 new 52-week highs and 9 new lows while the Nasdaq Composite recorded 47 new highs and 187 new lows.
Volume on U.S. exchanges was 22.41 billion shares, compared with the 19.99 billion average for the full session over the last 20 trading days. - Reuters