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.
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