U.S. stocks ended Monday's session with mixed results. The Nasdaq Composite and the S&P 500 declined, as initial relief from Federal Reserve Chair Jerome Powell's comments regarding interest rate concerns proved short-lived, and major indices were unable to maintain their upward momentum.
The Dow Jones Industrial Average rose by 76.92 points, or 0.17%, to close at 45,243.56. Conversely, the Nasdaq Composite fell by 176.50 points, or 0.84%, to 20,771.86, while the S&P 500 dropped 26.69 points, or 0.42%, to 6,342.16. Markets will be closed on Friday for the Good Friday holiday, although the March employment report is still scheduled for release that morning. Oil prices advanced at the start of the week, with West Texas Intermediate crude futures climbing 3% to surpass $103 per barrel. Brent crude futures showed little change, trading above $112 per barrel. Federal Reserve Chair Jerome Powell stated on Monday that despite rising energy prices, he believes inflation expectations "remain well anchored beyond the short term." While he acknowledged that the central bank "may eventually face the question of how to deal with this situation," he emphasized that it is "not really facing that yet because we don't know what the economic effects will be." The yield on the 10-year U.S. Treasury note declined following Powell's remarks. The benchmark yield was last down more than 9 basis points at 4.344%. Markets continued to monitor the U.S.-Israel conflict with Iran. Former U.S. President Donald Trump stated that without an agreement to "immediately" reopen the Strait of Hormuz, the U.S. would destroy Iranian oil wells and Kharg Island. 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 comments came as the crisis engulfing the Middle East entered its fifth week. Trump stated that if the strategically important 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. This followed a post by Trump on his Truth Social platform, in which he said: "The United States of America is in serious negotiations with 'a much more reasonable new regime' to end our military operation in Iran." He stated: "Substantial progress has been made in the negotiations, but if a deal is not reached in the short term for any reason (though it likely will be), and the Strait of Hormuz is not immediately 'open for business,' we will conclude our very pleasant 'stay' there by blowing up and totally destroying all of Iran's power plants, oil wells, and Kharg Island (and maybe all the desalination plants too!)—targets we have, to date, purposely 'not touched'." Previously, on Sunday, Trump had stated that Tehran had accepted most of the points in a U.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 remarks came as the Iran conflict entered its fifth week, with the Trump administration reportedly considering sending ground forces to occupy Kharg Island—a major fuel hub central to Iran's oil industry. An estimated 90% of Iran's crude oil exports pass through the island before tankers traverse the Strait of Hormuz. The island is reported to have a loading capacity of approximately 7 million barrels per day. Iran had not responded to Trump's latest comments at the time of reporting. Earlier in the day, an Iranian foreign ministry spokesperson was quoted as saying that Iran viewed proposals in the U.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, but with huge uncertainty around the timing and nature of the outcome." Discussing market sentiment, Mohamed A. El-Erian, Chief Economic Advisor at Allianz, stated: "We remain in this mindset that this is transitory, that somehow, yes, there are short-term effects, but we should look through it." He added that investors were 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." 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," stating on Monday, "If we start seeing that in Asia, that 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?" David Wagner of Aptus Capital Advisors, however, stated he is "not overly concerned," suggesting that sudden price spikes "can rattle investor confidence and spark inflation fears, but such shocks typically dissipate as the economy and markets adjust." The director of equities noted that "the fundamentals remain very strong," pointing out that the S&P 500's year-over-year earnings growth rate "remains well above historical growth rates." He added: "People are trying to paint this as a growth scare, but it isn't." Wall Street just concluded a losing week, with the Dow Jones and Nasdaq falling into correction territory. The Dow, Nasdaq, and S&P 500 all posted losses for the fifth consecutive week.
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