US stocks rallied on Monday and recovered the last of their losses caused so far by the US-Iran war, as Wall Street remains hopeful that the global economy can still avoid a worst-case scenario.
The S&P 500 rose 1% and is back to where it was before the United States and Israel attacked Iran in late February, just 1.3% below its all-time high set early this year. The Dow Jones Industrial Average added 301 points, or 0.6%, and the Nasdaq composite climbed 1.2%.
Even in the oil market, where prices jumped above $US100 per barrel after ceasefire talks over the weekend failed to end the war, prices pared their leaps as Monday progressed. The moves for financial markets overall were much more modest than the extreme swings that have hit since the war began.
Markets have been pinballing between worries that the war will last a long time and hopes for a resolution because all the parties would benefit from a freer flow of crude oil.
Trump enacts blockade
After the weekend's talks failed, US President Donald Trump announced a blockade of the Strait of Hormuz, which raises the pressure on Iran by trying to prevent it from making money by selling oil.
A blockade would keep even more oil off the global market, after prices already jumped for everyone worldwide because of Iran's restrictions on traffic in the important strait. The narrow waterway is how much of the oil produced in the Persian Gulf area reaches customers worldwide.
Iran responded by threatening all ports in the Persian Gulf and the Gulf of Oman. Afterwards, the price for a barrel of Brent crude, the international standard, rose 4.4% to settle at $US99.36 and is well above its roughly $US70 level from before the war.
But it remains below the $US119 peak it's touched at times, when worries about the US-Iran war have been at their heights. It also pulled back from its nearly $104 price reached earlier on Monday morning.
Speaking outside the Oval Office, Trump suggested on Monday the United States is still willing to engage with Iran.
"I can tell you that we've been called by the other side," Trump said.
First quarter earnings rolling in
In the meantime, big US companies are beginning to tell investors how much money they made during the first three months of the year. Strong reports could help make up for Wall Street's worries about the Strait of Hormuz because stock prices tend to follow the trend of corporate profits over the long term.
But worries about AI have been hammering software companies, centred on the risk that their businesses may become obsolete.
All told, the S&P 500 rose 69.35 points to 6,886.24. The Dow Jones Industrial Average added 301.68 to 48,218.25, and the Nasdaq composite climbed 280.84 to 23,183.74.
In the bond market, Treasury yields ticked lower as oil prices receded from their morning highs. The yield on the 10-year Treasury fell to 4.29% from 4.31% late Friday.
That could offer some relief for the housing market and rates for mortgages, which have been climbing with Treasury yields since the war began on worries about high oil prices and inflation. A report on Monday said that sales of previously occupied homes were weaker in March than economists expected.
In stock markets abroad, indexes fell across much of Europe and Asia. Hong Kong's Hang Seng fell 0.9%, and South Korea's Kospi dropped 0.9% for two of the world's larger losses.
The Associated Press
