U.S. stock indexes closed mixed on Wednesday. The Nasdaq Composite extended its winning streak to an eleventh consecutive session, closing at a fresh all-time high. The S&P 500 also reached a new record peak, with both indices marking their first historic closes since the onset of the US-Israel conflict with Iran. Investor optimism regarding a potential de-escalation of the conflict, coupled with strong corporate earnings expectations, attracted capital back into risk assets. Achieving new highs amid ongoing geopolitical tensions signals a shift in market risk assessment, as traders appear more willing to price in a lower probability of near-term escalation. When the conflict initially erupted last month, equities experienced a sharp sell-off, the oil market saw a historic shock, and concerns about inflation and the trajectory of U.S. interest rates were reignited. From the conflict's start on February 28th, the S&P 500 fell as much as 9%, though it did not meet the technical threshold for a "correction." Both the Nasdaq and the Dow Jones Industrial Average, however, did confirm they had entered correction territory. The market also found support from improving corporate profit outlooks. Executives from major banks indicated that U.S. consumers remain resilient despite the oil price shock, and that pipelines for mergers and acquisitions and initial public offerings are robust.
In market-specific action, the Dow Jones Industrial Average declined by 72.27 points, or 0.15%, to close at 48,463.72. The Nasdaq Composite advanced by 376.93 points, or 1.59%, finishing at 24,016.02. The S&P 500 gained 55.57 points, or 0.80%, settling at 7,022.95. Among individual stocks, Tesla (TSLA.US) surged 7.6%, while Apple (AAPL.US) gained nearly 3%. The Nasdaq Golden Dragon China Index rose 0.7%, with NetEase (NTES.US) increasing by 2%.
In Europe, major indices showed mixed results. Germany's DAX 30 index added 35.34 points, or 0.15%, to close at 24,069.63. Britain's FTSE 100 index fell 50.71 points, or 0.48%, to 10,558.35. France's CAC 40 index dropped 53.29 points, or 0.64%, ending at 8,274.57.
In Asia, Japan's Nikkei 225 index rose 0.44%, while South Korea's KOSPI index jumped 2.07%.
In the cryptocurrency market, Bitcoin climbed over 1.1% to $74,852.01. Ethereum gained more than 2%, reaching $2,367.01.
Oil prices saw minimal movement. The May contract for West Texas Intermediate crude futures edged up by 1 cent to settle at $91.29 per barrel, a gain of 0.01%. The June contract for Brent crude futures increased by 14 cents to close at $94.93 per barrel, up 0.15%.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, fell 0.07% to 98.056. By the close of New York forex trading, one euro could buy $1.1800, up from $1.1795. One pound sterling was worth $1.3572, up from $1.3568.
In precious metals, spot gold fell 1.02% to $2,391.24 per ounce. Spot silver saw little change, trading around $28.986 per ounce.
According to the Federal Reserve's Beige Book, the conflict has heightened uncertainty, leading many U.S. businesses to adopt a wait-and-see approach. The report noted that while overall economic activity continued to expand at a modest to moderate pace, energy and fuel costs increased "significantly" across all twelve Fed districts. The conflict was cited as a major source of uncertainty, complicating decisions on hiring, pricing, and capital investment.
Fed official Musalem stated that high oil prices could keep underlying inflation nearly a percentage point above the Fed's 2% target for the rest of the year, suggesting that the central bank may need to keep interest rates steady for some time. He indicated that the policy rate would likely remain in the current 3.50%-3.75% range while officials monitor incoming data.
U.S. Treasury Secretary Besant expressed optimism that gasoline prices could retreat to $3 per gallon during the summer driving season, contingent on progress in negotiations to end the conflict.
A report indicated that Iran has proposed allowing ships free passage on the Omani side of the Strait of Hormuz as part of ceasefire negotiations, though details regarding mine clearance and access for Israeli-linked vessels remain unclear.
Sources suggested that European Central Bank policymakers are cautious about raising interest rates as early as this month, citing a lack of concrete evidence that energy-driven inflation is spreading broadly or becoming entrenched. Markets are currently pricing in a low probability of an April rate hike.
In corporate news, a recent filing revealed that Alphabet's (GOOG.US, GOOGL.US) early investment in SpaceX could yield a windfall of approximately $100 billion. The filing showed Alphabet holds a stake that could be worth around $100 billion if SpaceX achieves a valuation of $2 trillion or more in a potential future IPO.
Comments