Wall Street posts three-week losing streak as Iran war batters sentiment
Trump does it again - market meltdown reversed by a change in rhetoric. In somewhat of a repeat of the tariff whiplash of last April, yesterday, Trump announced that we were close to the end of the Iran conflict, and the market reversed from losses to solid gains. This was led by a reversal in the price of crude oil, which had approached $120/bbl and then plummeted 30%. Once again, dip buyers were richly rewarded.
It was one of the biggest one-day moves since last April.
Volatility continues today, however. When the administration announced that today will be another day of intense attacks, crude oil moved up from $85.5/bbl to $91.4, and stocks fell. Then, further assurances that oil supplies were plentiful came, and crude dropped below $84.5. Stocks rallied; the S&P fell 37 points in the first hour, then moved up to +27 as oil fell. The Dow went from -297 to +246. While the trend is moving in the right direction, this kind of volatility is certainly unsettling for investors.
In other commodities, we find gold has pushed back above $5,200/oz after almost hitting $5,050 yesterday morning. Silver bottomed at almost $81/oz and is now above $89.5. Copper was similar, though it is lower today. Gasoline topped at $3.16/gal and is now $2.61. Natural gas hit $3.45/mcf and is now $3.04.
Interest rates have had their own volatility. The US 10-year was at 3.94% on Friday, February 27, before the missiles flew in Iran, peaked at 4.19% on March 8th, and is at 4.11% today. The 2-year went from 3.39% to 3.61% and is 3.55% now. Bets for a Fed cut have been pushed back due to energy-driven inflation concerns.
The resilience of the markets continues to impress, though YTD we remain in the red while the rest of the world’s equities are firmly in the green. The trend remains volatile, at least until the Iran situation is deemed closed.