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Stocks have surged while oil and gold have fallen following President Donald Trump’s response to Iran’s attack on two Iraqi bases housing US troops — more sanctions but no armed response.
4:15 p.m. ET: Stocks come off highs after rockets in Baghdad
Stocks fell after a Reuters report that two blasts were heard in the Iraqi capital of Baghdad, pulling back from record highs after Trump announced no armed response to Iran’s attacks. The blasts were later revealed to be rockets that fell within Baghdad’s Green Zone, causing no casualties. There was no immediate claim of responsibility, Reuters says.
Here’s where markets were at 4:15 p.m. ET:
S&P 500 (^GSPC): +0.49% or +15.87 points to 3,253.05
Dow (^DJI): +0.56% or +161.41 points to 28,745.09
Nasdaq (^IXIC): +0.67% or +60.66 points to 9,129.24
Crude oil (CL=F): -3.81% or -2.39 to 60.31 a barrel
Gold (GC=F): +2.57% or +0.0470 to 1.8740
2:45 p.m. ET: Market response to U.S.-Iran tensions will fade, strategist says
History suggests that developments in U.S.-Iran tensions will not leave a lasting mark on U.S. stocks, oil and safe haven assets, according to Capital Economics senior market economist Oliver Jones.
“We doubt that U.S.-Iran tensions will play more than a minor role in deciding the best and worst-performing asset classes in 2020 as a whole, at least outside the Middle East,” Jones wrote in a note entitled “A bit of perspective on geopolitical risk” Wednesday.
So far, Wednesday’s trading action – namely, a sharp rebound in equities and stark declines in oil and gold prices – are early indications that Jones’ thesis may come to pass over the course of the year.
“Such a small and short-lived reaction is actually fairly typical of what has happened after other events which have raised the risk of military action involving the U.S., like North Korea’s missile tests and the U.S. threats of ‘fire and fury’ in 2017, or the Cuban missile crisis in the 1960s,” Jones said.
As another example, Jones pointed to cross-asset performance after the start of the Gulf War in 1990s. In the immediate aftermath of this conflict, returns from energy commodities surged, precious metal prices firmed and equities sank, in a similar response as witnessed late last week after the first reports of the U.S. airstrike that took out top Iranian commander Qassem Soleimani.
“By the six-month mark, though, energy commodities had given back a lot of their initial gains. And precious metals had started to struggle, faring about as badly as global equities, which were contending with a recession in the US economy,” Jones said. A similar reversal also took place around six months after the start of the Iraq War in 2003, he added.
“These conflicts simply haven’t had large enough lasting effects on the global economy to matter much to markets outside the Middle East for long,” Jones said. “That looks like the most likely outcome this time too.”
1:45 p.m. ET: The oil shock is cancelled
Crude is collapsing in the wake of President Trump’s remarks, which markets are interpreting (rightly or wrongly) as a de-escalation of the U.S.’s standoff with Iran. Overnight, crude traders aggressively priced in the possibility of an armed confrontation, but Trump’s speech is momentarily calming fears of things heating up.
Brent is now down over 5% on the session, having cracked $60 per barrel.
1:38 p.m. ET: S&P 500 and Nasdaq hit record highs
Following Trump’s announcement that Iran is “standing down,” the S&P 500 hit a record high of 3,260.98 and the Nasdaq hit a record high of 9,144.00.
Here’s where the major indices were at 1:38 p.m. ET:
S&P 500 (^GSPC): +0.65% or +20.90 points to 3,258.08
Dow (^DJI): +0.70% or +201.12 points to 28,784.80
Nasdaq (^IXIC): +0.81% or +73.68 points to 9,142.26
Crude oil (CL=F): -5.12% or -3.21 to 59.49 a barrel
Gold (GC=F): -0.97% or -15.20 to 1,559.10 per ounce
12:55 pm. ET: GrubHub spikes on report of strategic options
GrubHub (GRUB) is staging a breathtaking rally of nearly 14% on the day, after The Wall Street Journal reported that the food delivery startup is weighing its options, which may include a sale. The report said talks are in early stages and nothing may come of it. The stock has hit rough shoals since going public nearly 6 years ago, with its valuation less than half of where it began life as a public company.
11:40 a.m. ET: Trump vows more sanctions on Iran but no armed response
Addressing Iran’s retaliation against U.S. bases in Iraq late Tuesday, President Donald Trump said Tehran “appears to be standing down” — in keeping with most observers’ thinking that an armed U.S. response isn’t imminent. Trump added that his administration “will immediately impose additional punishing economic sanctions on the Iranian regime.”
Investors seemed to cheer that news, with stocks adding to the session’s gains on hopes that tensions won’t spiral into further armed conflict.
Here were the main moves in markets, as of 11:46 a.m. ET:
S&P 500 (^GSPC): 3,257.71, up 0.68%
Dow (^DJI): 28,782.11, up 0.69%
Nasdaq (^IXIC): 9,133.99, up 0.72%
Crude oil (CL=F): $60.47 per barrel, down 3.56%
Gold (GC=F): $1,565.80 per ounce, down 0.54%
11:00 a.m. ET: The oil shock that never was (and might never be)
With Iran escalation fears (momentarily) in retreat, oil (CL=F) has reversed dramatically after spiking by 4% in after-hours trading on Tuesday. One of the major concerns about a prolonged U.S.-Iran conflict has been the impact on crude — and whether it would spark a global supply crisis that could send prices well above $100.
The U.S. shale boom has lubricated world markets with oil, and helped insulate the world’s largest economy from supply shocks. Torsten Slok, Deutsche Bank’s top economist, pointed out that the U.S. is in fact much less sensitive to rising oil prices than in years past.
10:46 a.m. ET: Nasdaq hits, holds near fresh record high
The Nasdaq posted an all-time high of 9,104.99 at about 10:15 a.m. ET. The index held near this record level as investors continued to shrug off the most recent U.S.-Iran developments. Both the S&P 500 and Dow were also in the green, with the former within 0.3% of its own all-time high at the highs of the session so far.
Here were the main moves in markets, as of 10:46 a.m. ET:
S&P 500 (^GSPC): 3,240.96, up 3.78 points or 0.12%
Dow (^DJI): 28,589.74, up 6.06 points or 0.02%
Nasdaq (^IXIC): 9,080.79, up 12.21 points or 11.75%
Crude oil (CL=F): $60.47 per barrel, down 3.56%
Gold (GC=F): $1,565.80 per ounce, down 0.54%
10:26 a.m. ET: Carlos Ghosn ends press conference
Over the course of a more than two-hour press conference in Lebanon, former Nissan chief executive officer Carlos Ghosn attempted to explain his reasoning for fleeing Japan, where he had been arrested under allegations of financial misconduct and aggravated breach of trust.
In his first public appearance since his escape, Ghosn went into detail over his treatment in Japan, which has a conviction rate north of 99% and where he believed he would not be given a fair trial. He described solitary confinement, a lack of access to prescribed medications, hours of interrogation and just two showers a week as all part of his incarceration.
Ghosn blamed a host of individuals and institutions for his situation, including Japanese prosecutors and government officials, and Nissan and its law firm.
The former auto executive was arrested in November 2018 and faced multiple charges for allegedly under-reporting years’ worth of compensation and misusing Nissan’s resources for his personal gain.
9:34 a.m. ET: Boeing shares fall after Ukrainian airplane crash
Shares of Boeing (BA) extended losses from the overnight session to trade more than 1% lower after a Ukrainian passenger jet crashed Wednesday shortly after taking off from Iran’s capital of Tehran, killing all 176 people aboard.
Iranian officials said they believed a mechanical issue caused the crash of the Boeing 737-800 aircraft, which had been en route to Ukraine’s capital Kyiv.
The crash took place just hours after Iran launched a missile attack on airbases in Iraq housing U.S. troops.
Ukrainian officials have most recently declined to offer their assessment for the cause of the accident, as the investigation remains ongoing.
9:31 a.m. ET: Markets open little changed
U.S. equities opened mostly flat, shrugging off earlier fears after Iran launched more than a dozen missiles to strike U.S.-Iraqi airbases.
Here were the main moves in markets, as of 9:31 a.m. ET:
S&P 500 (^GSPC): 3,238.20, up 1.02 points or 0.03%
Dow (^DJI): 28,548, down 35.51 points or 0.09%
Nasdaq (^IXIC): 9,075.09, up 6.51 points or 0.09%
Crude oil (CL=F): $62.40 per barrel, down 0.48%
Gold (GC=F): $1,578.40 per ounce, up $4.10 or 0.26%
8:15 a.m. ET: Private payrolls rise more than expected in December
The U.S. economy added 202,000 private payrolls at the end of last year, according to a report from ADP/Moody’s Wednesday. This exceeded consensus economist expectations for an increase of just 160,000, according to Bloomberg data. In November, private payrolls had risen by an upwardly revised 124,000, from the 67,000 reported previously.
By sector, service-producing firms led December’s advances, posting a net increase of 173,000 jobs. However, gains were capped by a loss of 21,000 jobs in the leisure and hospitality industry, and a loss of 14,000 jobs in the information industry.
Goods-producing firms increased jobs by a net 29,000, with a gain of 37,000 payrolls in construction industries offset by declines in mining and manufacturing.
8:00 a.m. ET: Carlos Ghosn speaks for the first time since fleeing Japan
Former Nissan chief Carlos Ghosn slammed the Japanese justice system during his first public appearance since fleeing the country.
“I did not escape justice. I fled injustice and persecution, political persecution,” Ghosn said at a press conference in Lebanon on Wednesday. “You're going to die in Japan or you've got to get out.”
7:33 a.m. ET: Stock futures muted after Iran missile strike scare
Wall Street jitters flared before quieting after Iran fired missiles at U.S.-Iraqi airbases during the overnight session. The retaliatory move by Iran, after a U.S. airstrike last week took out its top military general, produced no reported casualties so far.
Here were the main moves during the pre-market session, as of 7:33 a.m. ET:
S&P futures (ES=F): 3,241.50, up 6.25 points or 0.19%
Dow futures (YM=F): 28,513, down 13 points or 0.05%
Nasdaq futures (NQ=F): 8,870.25, up 17.25 points or 0.19%
Crude oil (CL=F): $62.59 per barrel, down $0.11 or 0.18%
Gold (GC=F): $1,578.90 per ounce, up $4.60 or 0.29%
After reports of the projectiles around 5:30 p.m. ET Tuesday, stock futures slid and gold and oil prices spiked. Brent crude oil prices briefly surged to $71.75 per barrel and gold jumped to more than $1,600 per ounce for the first time in about seven years. These gains, however, retraced shortly thereafter.
"There was a knee-jerk reaction in financial markets, with oil and gold prices rising,” UBS economist Paul Donovan wrote in a note Wednesday. “However, a response was expected by investors, and the initial market moves seem hard to justify."