Stocks rebounded, and oil prices fell on hopes of de-escalation in the conflict with Iran. Despite public denials of peace talks by Tehran, behind-the-scenes communication has been confirmed by mediators such as Pakistan, Egypt, and Turkey. Along with economic disincentives for a full-scale war on both sides, the market has found reasons for hope.
All major U.S. stock indices ended the day meaningfully higher. The Dow Jones Industrial Average rose 305 points to 46,429. The NASDAQ gained 0.67% to 24,163. The S&P 500 rose a bit more than half a percent to 6,592. Sectors also demonstrated a broad-based rally, with energy being the only sector posting a meaningful loss because of its general reaction to oil and natural gas prices.
The bond market rallied sharply, extending the high volatility. The U.S. 5-year Treasury yield declined 6 basis points to 3.97%, and the 10-year yield declined by nearly 7 basis points to 4.33%. Gold prices also rebounded significantly by nearly 3%, approaching the 4,600 mark.
We have a measure of import prices from February, and they were considerably higher than economists’ forecasts, with much of the rise coming from components outside of fuel. This is a concern, as it could limit the Federal Reserve’s ability to ease the economy further if higher import costs translate into higher consumer prices.
Meanwhile, the halt in TSA workers’ pay has resulted in severe strain on airport security and has so far caused some airports to experience security line wait times of more than four and a half hours, meaningfully delaying travel for many.
As diplomatic efforts appear to be picking up, we will continue to monitor the latest developments in Iran. This is Adams Wealth Advisors.