The main U.S. indexes were advancing more than one per cent on Monday afternoon after President Donald Trump said he had ordered the military to postpone strikes against Iranian power plants following “productive conversations” with Tehran.
Iran’s foreign ministry refuted the claim, with a spokesperson saying they had held no discussions with the United States and that their conditions to end the war had not changed. While another source told Reuters Israeli officials believed the U.S. and Iran could hold talks this week.
Global stock indexes staged a sharp recovery after Trump’s comments, while oil prices fell, signaling improving risk appetite. Equities had been trading lower earlier in the day after threats of attacks on Israeli and Iranian power networks.
“You never know who to believe but it does appear that Trump is trying to start discussions with somebody in Iran to resolve the war despite strong denials from Iran. This has caused significant optimism in stock prices today with the market up strongly although off its highest levels because of the Iranian denials,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
At 02:03 p.m. the Dow Jones Industrial Average rose 820.49 points, or 1.80 per cent, to 46,399.84, the S&P 500 gained 98.83 points, or 1.52 per cent, to 6,605.31 and the Nasdaq Composite gained 351.27 points, or 1.62 per cent, to 21,998.88.
All three indexes were, so far into the session, on track for their biggest single-day percentage gains since Feb. 6. The CBOE Volatility Index, Wall Street’s fear gauge, retreated after earlier hitting its highest level in two weeks. It was last down 1.78 points at 25.
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Canada’s main stock index, the Toronto Stock Exchange, was up by about two per cent as of publication.
Oil prices were down about 10 per cent, but the energy index was up 1.3 per cent, gaining along with all of the S&P 500’s 11 major industry sectors. The biggest advance among the sectors was in consumer discretionary, up 2.9 per cent while defensive healthcare was the slowest gainer, up 0.2 per cent.
Ghriskey said that with hopes for a resolution of the war “theoretically it takes the pressure off the U.S. consumer who’s been suffering from high oil prices.”
After Trump’s comments, investors trimmed bets for an interest-rate hike from the U.S. Federal Reserve to a 16 per cent probability for December from 25 per cent in the prior session, according to CME Group’s FedWatch.
Traders were betting on a roughly 70 per cent chance that rates would be unchanged by year end after scaling back bets for cuts last week after the central bank struck a hawkish tone due to concerns about higher inflation.
The small-cap Russell 2000 was outperforming with an advance of 2.9 per cent. On Friday, the index, which is sensitive to higher interest rates, had ended more than 10 per cent below its record close of January 22, confirming it had been in correction territory.
Fuel-hungry airlines jumped as the price of oil fell with Alaska Air up more than five per cent, while American Airlines and United Airlines added more than four per cent each.
Air Canada’s stock was up about three per cent as of publication, while Onex Corporation’s stock, the parent company of WestJet, was up close to two per cent.
Cruise ship operators soared, with Norwegian Cruise Line shares up almost eight per cent while Carnival Corp and Viking Holdings rose more than six per cent.
Banks, which had sold off sharply during the conflict, inched up, with JPMorgan Chase up 1.9 per cent and Goldman Sachs adding three per cent. The S&P 500 Banking index gained 1.8 per cent.
Investors will look forward to Federal Reserve speakers, business activity surveys and consumer sentiment readings this week.
In individual stocks, Synopsys gained 4.2 per cent after activist investor Elliott Investment Management built a multibillion-dollar investment in the electronic design automation firm.
Advancing issues outnumbered decliners by a 4.28-to-1 ratio on the NYSE, where there were 48 new highs and 93 new lows. On the Nasdaq, 3,532 stocks rose and 1,181 fell as advancing issues outnumbered decliners by a 2.99-to-1 ratio.
The S&P 500 posted six new 52-week highs and seven new lows while the Nasdaq Composite recorded 30 new highs and 138 new lows.
– With files from Global’s Ariel Rabinovitch
Hope he also informed Israel of this delay. Israel would probably like to destroy more of Iran…
TACO Donnie at his best! If I was Iran I wouldn’t trust one word out his conman, felon mouth. Remember there were supposedly great negotiations going on when Israel/US attacked!
So someone farted by the Iranian border and gas prices jumped within an hour. So I guess now that oil prices are dropping we will see the prices go down just as fast won’t we?
Few days ago ….. “‘Months if not years’ for oil prices to normalize if Iran war ends now: Expert”
Today….. “Oil prices fall, stock markets set to rally after Trump delays Iran strikes.”