Wall Street stocks showed little conviction yesterday, drifting along near record highs, while crude oil prices retreated as investors eyed possible progress in US-Iran peace negotiations.
All three major US stock indexes wavered in early trading with a pullback in chip stocks weighing on the Nasdaq, while Treasury yields eased on hopes that the months-long blockade of the Strait of Hormuz could soon be lifted, easing fears that the resulting energy price squeeze could metastasize into higher inflation, and in turn, tighter monetary policy.
Iran’s state TV said it obtained a draft of an unofficial framework of an initial understanding between Washington and Tehran toward ending the conflict, which would entail Iran restoring shipments through the crucial waterway to pre-war levels within a month.
The White House said the report was false.
“Regarding news reports that Iran may reopen the strait in a month, I’m not sure that’s something anybody’s going to get excited over,” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “As we’ve seen, a lot can happen in a month.”
This follows claims from Iran on Tuesday that the US violated the ceasefire, potentially complicating peace efforts. For its part, Washington insisted its recent strikes were defensive in nature.
As of yesterday, however, the fragile truce remained intact, offering hope that a deal could be imminent.
Financial markets are currently pricing in a 38.1 per cent likelihood that the US Federal Reserve will raise interest rates in December according to CME’s FedWatch tool, which showed zero possibility of a December rate hike one month ago.
The Dow Jones Industrial Average rose 365.54 points, or 0.72pc, to 50,827.22, the S&P 500 rose 0.02 points, or 0.01pc, to 7,519.79 and the Nasdaq Composite fell 75.16 points, or 0.27pc, to 26,585.03.
European shares, enjoying a boost from auto and chemical stocks, hovered near all-time highs even as market participants kept a wary eye on Middle East tensions.
MSCI’s gauge of stocks across the globe rose 1.32 points, or 0.12pc, to 1,122.74.
The pan-European STOXX 600 index slipped 0.05pc, while Europe’s broad FTSEurofirst 300 index lost 0.73 points, or 0.03pc. Emerging market stocks rose 20.17 points, or 1.17pc, to 1,740.58.
Crude oil prices dropped on signs of progress in US-Iran peace talks.
“Oil is off its high at this point, I think oil is getting closer to where it ought to be, given that it doesn’t appear that (the war) is going to escalate from here and that everybody’s looking for an off-ramp,” Pursche added.
US crude fell 4.61pc to $89.56 a barrel and Brent fell to $95.54 per barrel, down 4.06pc on the day. US Treasury yields edged lower on continued signs of progress in Middle East peace talks.
The yield on benchmark US 10-year notes fell 2 basis points to 4.471pc, from 4.491pc late on Tuesday.
&uuid=(email))