'Compressed spring': US indices soar, oil collapses on 24th day of war with Iran

U.S. stocks rose sharply at the end of trading on March 23 amid highly contradictory statements from Washington and Tehran about the prospects for de-escalation of the conflict between them.

- The broad market index S&P 500 jumped by 1.2% at the end of trading on March 23.

- The Dow Jones Industrial Avegare added 1.4 percent.

- The Nasdaq Composite Technology Index also rose 1.4 percent.

Before that rally, the Dow and Nasdaq Composite were close to moving into correction territory - as of Friday, they were about 9.8% below their record highs. The S&P 500 was down 7% from its high before reversing Monday, CNBC calculated.

- The strongest result was shown by the results of the session by the index of small and medium capitalization companies Russell 2000, it soared by 2.7%.

- Brent crude futures collapsed by 11% and were trading at just under $100 per barrel by the close. Exchange contracts for North American WTI lost 9.7% and cost just under $89 per barrel.

Growth was broad: appreciated as cyclical stocks - banks and industry, as well as the technology sector, notes CNBC. Quotes Tesla soared by 3.5%, Amazon securities rose by 2.3%, Nvidia and Meta increased capitalization by 1.7%

Cheaper oil prices supported the shares of American airlines: Delta Air Lines rose by 2.6%, United Airlines - by 4.5%, Southwest Airlines - by 2.4%, and American Airlines - by 3.7%. Quotes of travel booking services also jumped in anticipation of stronger demand in case of settlement of the war with Iran, CNBC writes. Booking added 1.4%, short-term rental platform Airbnb added 3.2%, and hotel chains Hyatt Hotels, Marriott International and Hilton Worldwide Holdings added more than 2%. Shares of cruise companies Carnival and Royal Caribbean Cruises soared more than 5.5%.

U.S. President Donald Trump's statements that the parties have had "productive talks" and he is now suspending strikes on Iranian power plants and energy infrastructure for five days has given investors hope for a quick conclusion to the Middle East conflict, CNBC explains. Prior to that, futures were pointing lower in the stock market on the morning of March 23 - especially after the ultimatum announced over the weekend. The U.S. leader promised to attack Iranian power plants if the Strait of Hormuz is not opened within 48 hours, and Tehran responded by saying it would hit U.S. infrastructure if the threat was realized.

The president's words on Monday triggered a violent five-minute rally that culminated the most volatile trading day on Wall Street since the war in the Middle East began, Bloomberg points out. At the peak, the Dow and Nasdaq each added 2.5 percent and the S&P 500 was up 2.2 percent, its biggest gain since Ma.

Later on Monday, Trump said the two countries wanted to "make a deal" and that they would "get together today, probably on the phone." But after Iranian state media reported that there were no direct talks between the U.S. and Iran, U.S. indexes slowed and oil bounced off the day's lows.

By evening, Mohsen Rezaei, a military adviser to the Islamic republic's supreme leader, said on Iranian television that the war would continue until all damage to the country was repaid, all economic sanctions were lifted and international guarantees preventing U.S. interference in Iran's affairs were obtained, Bloomberg reported.

- Despite the expected volatility, stocks could recover well before the war between the U.S. and Iran officially ends, says CapWealth Chief Investment Officer Tim Pagliara. "For weeks, the stock market has been looking for any sign of de-escalation of the conflict. On Monday, it finally saw them, which triggered a return of risk appetite," Pagliara said.

- "The market was desperate for some good news, and this is, at least at first glance, the best we could hope for," agrees B. Riley Wealth Management chief market strategist Art Hogan. Riley Wealth Management's Art Hogan. - If we see further declines in energy prices, the market is like a compressed spring just waiting for a reason to go up.

- Monday's rebound could be a signal for further gains - provided that subsequent talks between the U.S. and Iran eventually lead to a stabilization of the situation, predicts Jeff Kilburg, founder of KKM Financial. "Stock markets have finally found a way out of the extreme uncertainty and significant oversold conditions caused by the conflict with Iran. If this becomes the basis for peace in the Middle East, stocks could return to all-time highs," he allowed.

- "If this situation is not resolved in the next seven to ten days, we face a pandemic [coronavirus] scenario shutdown of the global economy," warned BCA Research chief strategist Marko Papich, "Today's announcement showed that Trump realizes: the real economy could go off the rails.

- "It's impossible to say whether this signals real progress toward ending the war or whether this is Trump zigzagging to buy time and prevent oil from spiking toward $150 a barrel," Evercore's Krishna Guha told Bloomberg. - Nevertheless, it should provide at least a short-term respite for the rates market - perhaps a longer one." While a scenario without a Fed rate cut this year can't be ruled out, the strategist believes that easing of the regulator's policy remains far more likely than tightening.

This article was AI-translated and verified by a human editor