U.S. stocks rose on Monday as concerns over the impact of Iran’s attack on Israel eased and the focus returned to inflation risks over earnings season and interest rate cut expectations.
The S&P 500 (^GSPC) rose about 0.5%, and the Dow Jones Industrial Average (^DJI) rose 0.5% (over 360 points) after ending the week with a significant decline. The Nasdaq Composite Index (^IXIC), which has a high proportion of high-tech stocks, rose 0.4%.
The focus is shifting as investors shake off initial fears of a full-blown war in the Middle East following Iran’s direct missile and drone attack on Israel on Saturday. U.S. efforts to encourage Israel not to retaliate have helped calm tensions, in part because well-communicated attacks have been able to limit the damage.
Stocks have been under pressure in recent days due to a lackluster start to earnings season and lingering concerns that inflation will not cool to the Federal Reserve’s 2% target. . Traders scaled back bets on the depth of the Fed’s rate cuts this year after disappointing economic data.
Retail sales rose 0.7% in March from the previous month as consumers continued to spend despite the high interest rate environment. The monthly data beat economists’ expectations for a 0.4% rise, according to Bloomberg data.
Goldman Sachs (GS) got off to a bright start to the week with its earnings results on Monday, as investors focus on company performance for a return to stock price gains in early 2024. Shares of the Wall Street financier rose more than 5% after its first-quarter profit beat expectations.
Among primary goods, oil prices fell more than 1% on Monday after rising before the Iranian airstrike. West Texas Intermediate crude futures (CL=F) hovered around $85 a barrel, while Brent crude oil futures (BZ=F) neared the $90 mark.
Meanwhile, the 10-year Treasury yield (^TNX) added about 10 basis points to hover around 4.61%, recovering from Friday’s plunge and aiming to return to a five-month high hit last week. Gold (GC=F), a fellow safe-haven asset, fell after rising as much as 1.2% last week due to escalating tensions in the Middle East.
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