"For the market, the war is over": US stocks down slightly 2 days before truce expires

The main indexes of American shares only slightly decreased at the end of trading on Monday, April 20, and oil prices rose significantly. Tensions between the U.S. and Iran intensified over the weekend, but traders are betting that the two countries will eventually reach a compromise, CNBC reported. U.S. President Donald Trump said he is unlikely to extend the truce with Tehran, which ends Wednesday, if a peace deal with Tehran is not reached and emphasized that the U.S. will continue to block the Strait of Hormuz until an agreement is signed.

- The S&P 500 broad market index was down 0.2% on Monday, retreating from Friday's high.

- The blue-chip index Dow Jones Industrial Average closed at almost the same level as at the previous session, losing only 0.01%.

- The Nasdaq Composite Technology Sector Index fell 0.3 percent, breaking its longest streak of gains since 1992.

- The Russell 2000 index of small and mid-capitalization companies rose against this backdrop and hit a new record, up 0.5%.

- Brent crude futures rose by 5.2% to trade above $95 per barrel. North American WTI rose by 5.2% to $86 per barrel.

U.S. President Donald Trump said on Monday he is unlikely to extend the truce with Tehran, which expires on April 22, if a peace deal is not reached before the deadline. He also emphasized that the Strait of Hormuz will remain blocked until a peace deal is signed. "I'm not going to rush in and make a bad deal," Bloomberg quoted Trump as saying. The US president said that the American delegation is heading to Pakistan, although Iran has not yet confirmed whether it will participate in further talks, the agency writes. Trump also threatened to blow up all power plants and bridges in Iran if the country does not agree to a deal with the US, CNBC reports.

Traffic through the Strait of Hormuz, key to the world's supply of oil and other materials, has once again been reduced to a trickle as Iran tightened controls in response to strikes on an Iranian ship by the U.S. Navy. As late as Friday, it appeared that this paralysis was coming to an end, with Tehran saying it would reopen the waterway, but withdrew the decision when it became clear that the U.S. was not lifting its blockade of Iranian ports in response.

While investors are closely watching events in the Middle East, an important driver could come from the U.S. Federal Reserve, Bloomberg notes. Trump's nominee to head the Fed, Kevin Warsh, is scheduled to appear before the Senate Banking Committee on Tuesday.

- "Well, that didn't last long, did it? The much-discussed 'opening' of the Strait of Hormuz barely lasted a day before tensions returned on Friday," Forex.com analyst Fawad Razaqzada told Bloomberg. - Still, there's a sense that both sides may just be showing tough rhetoric: there's not much time left before the [deadline] and each is trying to strengthen their negotiating positions."

- "For the market, the war with Iran is behind us," David Wagner, head of equities and portfolio manager at Aptus Capital Advisors, told CNBC. - Many people are talking about the need for some kind of downward revaluation of the market because they think it's been very expensive in recent years. I completely disagree with that." According to the analyst, the near-term picture for stock returns is quite favorable - due to expanding multiples and earnings growth.

- "It's important to remember that the market wasn't cheap already before the war, and the recent rally has only brought us back slightly above breakeven since the beginning of the year," CNBC quoted Certuity Chief Investment Officer Scott Welch as saying. - "We expect investors to focus back on more fundamental issues - valuations, earnings growth potential, inflation, the economy, the labor market and Fed policy - soon.

- Citigroup analysts say oil prices could rise to $110 a barrel if disruptions to traffic through the Strait of Hormuz continue for another month. They predict Iran and the U.S. will sign a tentative agreement or extend the cease-fire, and this could develop into a more comprehensive deal over time. "That said, we remain willing to revise the forecast toward a scenario with more prolonged disruptions if negotiations reach an impasse," Bloomberg quoted Citi as saying in a note.

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