The market is further coming around to the conclusion that peace talks are taking place, or that even if they’re not — Trump wants the bombs to stop falling and oil prices to come down.
There is always the risk that Iran wants to keep the Strait closed and press for a better deal but the US has the power to kill leadership and that’s a powerful motivator to make a deal.
Whatever the driver, the S&P 500 is up 2% to a session high, or 134 points to 6639.
Other markets:
Nasdaq +2.3%Russell 2000 +3.0%DJIA +2.1%Toronto TSX +1.8%
The winners today are led by travel stocks and those who are heavy users of fuel, including miners along with housing-related stocks due ot a falling likelihood of rate hikes. There is also the unwinding of the recession trade that has been creeping into markets in the past week, particularly on Friday.
Some of the largest gainers:
Norwegian Cruise Lines +8.1%MGM Resorts +7.1%Freeport-McMoran +7.4%Lowe’s +5.1%GM +4.9%American Airlines +4.8%
The losers are a small number companies that benefited from the closure of the strait of Hormuz and war:
CF Industries -5.1%Enphase -2.0%Northrop Grumman -1.6%Occidental Petroleum -0.8%
The chart shows a solid turnaround but also underscores that US stocks weren’t hurt particularly badly from the war. However on Friday it looked like the market was setting up for a further breakdown and that would have been underscored if Trump didn’t post that the US agreed to a 5 day ceasefire on energy infrastructure.
Trump further goosed the market when he spoke to the media and indicated a high chance of making some kind of final deal. Time will tell if that’s a ruse or if today is the day to buy the dip. It’s been an utter rollercoast of a month so far.
This article was written by Adam Button at investinglive.com.