U.S. stocks showed a mixed performance during Monday's early session, with the Nasdaq Composite turning lower while gains in the Dow Jones and S&P 500 narrowed. The U.S.-Israel conflict with Iran entered its fifth week. Former President Donald Trump stated that U.S.-Iran negotiations have "made significant progress," but warned that if an agreement is not reached to "immediately" reopen the Strait of Hormuz, the U.S. would destroy Iranian oil wells and Kharg Island.
The Dow Jones Industrial Average rose by 191.71 points, or 0.42%, to 45,358.35. The Nasdaq Composite fell by 5.09 points, or 0.02%, to 20,943.27. The S&P 500 gained 10.85 points, or 0.17%, reaching 6,379.70. The U.S. stock market will be closed on Friday for Good Friday, though the March employment report is still scheduled for release that morning.
Trump warned Iran on Monday to immediately reopen the strategically vital Strait of Hormuz or risk attacks on its oil wells and power plants. These remarks came as the crisis engulfing the Middle East entered its fifth week. Trump stated that if the Strait of Hormuz is not reopened "immediately" and a peace agreement is not reached "in the short term," the U.S. would "completely" destroy Iran's power plants, oil wells, and Kharg Island. Previously, Trump posted on Truth Social: "The United States is engaged in serious negotiations with 'a more reasonable new regime' to end our military operations in Iran." He said, "Negotiations have made significant progress, but if for any reason an agreement is not reached in the short term (though it likely will be), and the Strait of Hormuz is not immediately 'open for business,' we will conclude our pleasant 'stay' there by blowing up and utterly destroying all of Iran's power plants, oil wells, and Kharg Island (and perhaps all desalination plants too!)—targets we have so far deliberately 'avoided'." Earlier on Sunday, Trump stated that Tehran had accepted most of the U.S.'s "15-point plan" to end the war and that Iran had agreed to allow an additional 20 oil tankers to pass through the Strait. His comments came as the Iran conflict entered its fifth week, with the Trump administration reportedly considering deploying ground forces to occupy Kharg Island—a major fuel hub central to Iran's oil industry. Approximately 90% of Iran's crude oil exports are estimated to pass through the island before tankers traverse the Strait of Hormuz. The island is reported to have a daily loading capacity of about 7 million barrels. Iran has not yet responded to Trump's latest remarks. Earlier in the day, an Iranian foreign ministry spokesperson was quoted as saying that Iran views proposals in the U.S.'s "15-point plan" as "excessive and unreasonable." Iranian leaders have previously denied engaging in direct talks with the U.S. Vandana Hari, founder of oil market analysis provider Vanda Insights, said: "The market has largely moved past pricing in a negotiated end to the war—despite Trump's claims of 'direct and indirect' talks with Iran—and is instead preparing for a sharp escalation in military hostilities, which is a bullish signal for crude oil, though there is significant uncertainty regarding the timing and nature of the outcome." Speaking about market sentiment, Mohamed A. El-Erian, Chief Economic Advisor at Allianz, stated: "We remain with this mindset that this is transitory, and to some extent, yes, there are short-term effects, but we should look through it." He added that investors are also not pricing in the "very limited policy flexibility" resulting from the war. "It really is a question mark what the Fed will do, and we already have a 6% deficit," he continued. "The market hasn't fully internalized that if this persists, the room for policy hedging will be much smaller than what we had before." Despite gains in equities, crude oil prices moved higher at the start of the week. Brent crude futures rose 2%, surpassing $115 per barrel. West Texas Intermediate crude futures increased by 1%, exceeding $101 per barrel. In recent weeks, traders have been concerned that rising energy prices could harm the economy. El-Erian suggested that the next economic tipping point would be "physical shortages." He stated on Monday, "If we start seeing that in Asia, it will affect the U.S." He continued, "The U.S. will now import more expensive products; the question is whether we will now also see disruptions in product availability." Wall Street just concluded a declining week, with the Dow Jones and Nasdaq falling into correction territory. The Dow, Nasdaq, and S&P 500 all recorded their fifth consecutive weekly decline.
Comments