US equities climbed on Monday as concerns regarding the aftermath of Iran’s assault on Israel diminished, enabling the focus to revert back to earnings season and inflation worries over rate-cut expectations.
The S&P 500 (^GSPC) increased by approximately 0.9%, while the Dow Jones Industrial Average (^DJI) surged by almost 1%, equivalent to over 360 points, following a week that concluded with significant losses. The Nasdaq Composite (^IXIC), known for its tech-heavy composition, also saw a rise of 0.6%.
Investor attention is now shifting as they disregard initial worries about a full-fledged war in the Middle East post Iran’s direct missile and drone attack on Israel during the weekend. Attempted interventions by the US to dissuade Israel from retaliating have contributed to calming nerves, particularly as the well-anticipated strike allowed for limited damage.
Equities came under strain recently due to lackluster initial performances in the earnings season, alongside ongoing concerns that inflation has stagnated, impeding progress towards the Federal Reserve’s 2% goal. Traders have reduced their expectations for the extent of interest rate cuts by the Fed this year in light of disappointing economic indicators.
Goldman Sachs (GS) initiated a positive tone to the earnings week on Monday, with investors banking on corporate outcomes to reignite the early 2024 stock rally. Shares of the renowned Wall Street institution experienced a 5% surge after its first-quarter profits exceeded expectations.
In the commodities sector, oil prices dipped by approximately 1% on Monday following an upsurge before Iran’s airstrike. West Texas Intermediate crude futures (CL=F) traded around $85 per barrel, while Brent futures (BZ=F) approached the $90 threshold.
Meanwhile, the 10-year Treasury yield (^TNX) gained nearly 10 basis points, hovering around 4.61%, bouncing back from a significant decline on Friday, indicating a potential return to the five-month high from last week. Safe haven asset gold (GC=F) retreated after a surge of up to 1.2% last week amidst escalating Middle East tensions.
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Mon, April 15, 2024 at 6:59 AM PDT
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