U.S. stocks swung Monday as oil prices kept climbing because of uncertainty about when the war with Iran could end. The S&P 500 slipped 0.4% and deepened its loss since the war began to pull 9.1% below its record set early this year. The Dow Jones Industrial Average added 49 points or 0.1% and the Nasdaq composite fell 0.7%. Stock indexes rose in Europe but fell sharply in some Asian markets while the price for a barrel of benchmark U.S. crude rose 3.3% to settle at $102.88. The mixed movements followed a whirlwind of action in the war over the weekend, including an entry into the fighting by Houthi rebels in Yemen.
Shortly before Monday's U.S. stock market open, President Trump posted on social media that "great progress has been made" with a "new, more reasonable regime" to end U.S. military operations in Iran, while threatening to "blow up and completely obliterate" its power plants if no deal is reached soon and the Strait of Hormuz isn't immediately reopened for oil flow. This fits last week's pattern of touting optimistic talk progress only for doubts to quickly erode hopes of a swift war end. Investors are now giving Trump's statements less weight amid the back-and-forth, yet stocks remain cheaper than pre-war levels, tempting some to buy.
The Federal Reserve can possibly damage if it decides oil prices are threatening to stay high for long enough that it needs to raise interest rates. Higher interest rates would help keep a lid on inflation but they would also slow the economy and push down on prices for all kinds of investments.
Sysco fell 15.3% to help lead the market lower after it said it was buying Jetro Restaurant Depot for $21.6 billion in cash and enough Sysco shares to value the company at about $29.1 billion. Alcoa rose 8.2% for one of the market’s biggest gains on speculation it could get more business after attacks damaged rival aluminum facilities in the Middle East over the weekend.
In stock markets abroad, the FTSE 100 in London climbed 1.6%, and the CAC 40 in Paris rose 0.9%. That followed drops of 3% for Seoul’s Kospi, 2.8% for Tokyo’s Nikkei 225 and 0.8% for Hong Kong’s Hang Seng.
Treasury yields have been leaping in the bond market since the war began because of such worries, but they eased somewhat on Monday. The yield on the 10-year Treasury fell to 4.35% from 4.44% late Friday. That’s a significant move for the bond market and offers some breathing room for Wall Street. But it remains far above its 3.97% level from before the war.