The major U.S. and Canadian stock indexes ended higher on Monday, as investors appeared hopeful that a resolution to the Middle East war could be found while they looked past the failed weekend talks between the U.S. and Iran and monitored the start of the earnings reporting season.
After a muted start to the day, stocks picked up some steam on Monday afternoon after U.S. President Donald Trump said that Iran wants to make a deal but that he will not come to any agreement that allows Tehran to have a nuclear weapon. This was after Trump announced that the U.S. military began a blockade of ships leaving Iran’s ports, while Tehran threatened to retaliate against ports of its Gulf neighbours after weekend talks on ending the war broke down.
By Monday’s close, the benchmark S&P 500 had erased all its losses after the war began, closing 0.1% above its February 27 finish.
“And so there seems to be some desensitization around these back and forth talks with negotiations on, negotiations off, especially in the midst of this ceasefire, which seems to be holding for the moment,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
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“Investors are fearful to be caught off sides, that if we have a resolution come together quickly, that the market could rally significantly and they’d be left on the sidelines.”
It also helped that crude oil futures pared earlier gains to settle below the US$100 level. Chicago Federal Reserve President Austan Goolsbee said oil futures markets are pricing an expectation the surge in oil prices will be short-lived, and that as long as this is the case the impact on the U.S. economy may be limited.
The Dow Jones Industrial Average rose 301.68 points, or 0.63%, to 48,218.25, the S&P 500 gained 69.35 points, or 1.02%, to 6,886.24 and the Nasdaq Composite gained 280.84 points, or 1.23%, to 23,183.74. However, volume was light with 15.90 billion shares changing hands compared with the 19.07 billion moving average for U.S. exchanges’ last 20 sessions.
The S&P fell as much as 7.8% from pre-war levels since the hostilities began in late February.
The Toronto Stock Exchange’s S&P/TSX Composite Index ended up 183.48 points, or 0.54%, at 33,879.24, marking its highest closing level since March 4.
The TSX technology sector jumped 4.5%, helped by a gain of 6.4% in the shares of application software company Constellation Software Inc.
Energy rose 0.8% as the price of U.S. oil settled 2.6% higher at US$99.08 a barrel, while heavily weighted financials added 1.2%.
Three of the 10 major TSX sectors ended lower, including consumer staples, which was down 2.4%. Canadian waste management firm GFL Environmental said it would buy peer Secure Waste Infrastructure in a deal worth about C$6.4 billion, including debt, as it looks to deepen its presence in Western Canada. Shares of GFL tumbled 10.0%, while Secure Waste shares ended 5.1% higher.
On Wall Street, among the S&P 500’s 11 major industry sectors the biggest gainers were financial services and technology, both finishing up more than 1.7%. Technology was boosted by software companies, including Microsoft, which ended up 3.6% and Oracle, which soared 12.7%and was the S&P 500’s biggest percentage gainer. The iShares expanded Tech-software index ETF, which has been under pressure so far this year on concerns about AI disruption, rallied 5.4% on Monday for its biggest one-day gain since April last year.
Defensive utilities and consumer staples were the only sectors to lose ground with utilities falling 1.2% while staples lost 1%.
Investors appeared less than impressed by Goldman Sachs’ kick-off of the first-quarter earnings season, making it the weakest stock in the Dow Industrials on Monday. Its shares finished down 1.9% with concerns over weakness in fixed income, currencies and commodities trading revenue outweighing its profit beat.
“We don’t see the market really paying too much attention to the earnings beat. And it’s all because of prospects of higher inflation, weaker economic activity and a Fed that may be forced to stay on hold for a long, long time,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
Goldman CEO David Solomon said market volatility stemming from the conflict had tempered IPO execution, but the environment remains robust and activity will rebound once conditions stabilize.
Investors are waiting for results from a slew of major banks on Tuesday morning, including JPMorgan, Citi and Wells Fargo.
Elsewhere, shares of Allogene Therapeutics finished up 12.5% after earlier hitting their highest levels in over two years after interim data from a mid-stage study showed that its blood cancer therapy reduced the risk of relapse in patients. Shares in Albemarle, the world’s largest lithium producer, rallied 6.8% after Oppenheimer raised its price target on the company to $222 from $216.
While the Dow Jones Transportation Average index finished up 2.5%, its weakest stocks were airlines with United Airlines and Delta Air Lines losing more than 1% and American Airlines falling 0.8% on concerns about higher oil prices swelling fuel costs.
Shares in industrial supplies distributor Fastenal’s tumbled 6.9% after earnings.
However, Sandisk jumped 11.8% as the memory chipmaker was on track to join the Nasdaq-100 index on April 20.
Separately, data showed that U.S. existing home sales fell to a nine-month low in March amid tight inventory and growing concerns over the labor market.
Advancing issues outnumbered decliners by a 2.8-to-1 ratio on the NYSE where there were 216 new highs and 63 new lows. On the Nasdaq, 3,533 stocks rose and 1,251 fell as advancing issues outnumbered decliners by a 2.82-to-1 ratio. The S&P 500 posted 21 new 52-week highs and 11 new lows.
Reuters, Globe staff