U.S. stocks rallied and crude prices fell on Monday despite Iran retaliating to U.S. attacks over the weekend in a major sigh of relief for investors who also were upbeat about prospects of the Federal Reserve rate cut as early as July. All three major indexes ended in positive territory.
The Dow Jones Industrial Average (DJI) jumped 0.9% or 374.96 points, to end at 42,581.78 points.
The S&P 500 rose 1% or 57.33 points to close at 6,025.17 points, snapping its three-day losing streak. Consumer discretionary, Communication services, industrials and tech stocks were the biggest gained, while energy stocks were the worst performer.
The Consumer Discretionary Select Sector SPDR (XLY) gained 1.8%, while the Technology Select Sector SPDR (XLK) added 1%. The Communication Services Select Sector SPDR (XLC) gained 1%, while the Industrials Select Sector SPDR (XLI) rose 1.1%. The Energy Select Sector SPDR (XLE) lost 3.3%. Nine of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq advanced 0.9%, or 183.57 points, to finish at 19,630.98 points.
The fear-gauge CBOE Volatility Index (VIX) was down 3.83% to 19.83. Advancers outnumbered decliners on the NYSE by a 2.35-to-1 ratio. On Nasdaq, a 1.38-to-1 ratio favored advancing issues. A total of 18.60 billion shares were traded on Monday, higher than the last 20-session average of 18.16 billion.
Iran, reportedly, attacked a U.S. airbase in Qatar on Monday after America hit Iranian nuclear sites in Fordow and Natanz on Saturday. However, the Iranian missiles were intercepted by Qatar and no casualties were reported.
Investors had initially panicked that crude prices would soar after U.S. joined the conflict. However, Iran’s response was more restrained than expected, leading to a sell-off in oil on Monday as investors believe that the ongoing conflict will not disrupt crude supply to the extent they had initially believed.
West Texas Intermediate futures fell over 7% to close at $68.51 per barrel after hitting six-month high of $78 per barrel a day earlier. Energy stocks declined on Monday. shares of Exxon Mobil Corporation (XOM) declined 2.6%, while Chevron Corporation (CVX) ended 1.8% lower. Exxon Mobil has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Concerns over the ongoing Middle East crisis were offset by prospects of the Federal Reserve cutting interest rates as early as July. President Donald Trump has repeatedly slammed Federal Reserve Chaiman Jerome Powell for not cutting interest rates which is costing the U.S. economy “hundreds of billions of dollars.”
