Trump said the US was in serious discussions with a “more reasonable regime” to end the war, but repeated his threat to open the Strait of Hormuz or risk US attacks on Iranian oil wells and power plants. Iran described US peace proposals as unrealistic.
At the same time, the conflict has been escalating. Yemen’s Iran-backed Houthi militia entered the war over the weekend.
Investors have been rattled by uncertainties surrounding the Middle East war, which has caused oil prices to spike and has fanned inflation fears.
“The administration continues to send mixed messages,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
“When the messages seem good, to the extent they are believed, it helps the market. If something they say implies a more aggressive approach, the market sells off.”
Meckler said investors may be looking for a technical “bottom” after recent selloffs.
All three of the major indexes started the day higher after logging sharp declines in the previous session. Since the war started, the Dow, the Nasdaq and the small-cap Russell 2000 have all confirmed correction territory, ending 10% lower from their record-high closes.
Technology stocks were among the day’s biggest drags on the S&P 500, with a semiconductor index falling 4.2%.
The Dow Jones Industrial Average rose 49.50 points, or 0.11%, to 45,216.14, the S&P 500 lost 25.13 points, or 0.39%, to 6,343.72 and the Nasdaq Composite lost 153.72 points, or 0.73%, to 20,794.64.
Comments from Federal Reserve Chair Jerome Powell gave some support to stocks. Powell said longer-term inflation expectations appear to be holding despite the current energy shock, and the Fed does not yet need to make a decision on how to react to the latest troubles.
Money market participants have priced out any easing from the Federal Reserve this year, compared with two cuts expected before the war began, per the CME Group’s FedWatch Tool.
The S&P 500 energy index ended down 0.9% even as oil prices settled higher on the day. Brent crude is on track for a record monthly rise and US crude settled above US$100 a barrel for the first time since 2022.
On the flip side, the financial index gained 1.1% after the US labor department issued long-awaited guidelines intended to clarify how trustees can add alternative assets to 401(k) retirement plans.
Shares of asset managers climbed, with Blackstone rising 3.3% and KKR gaining 2.1%.
Declining issues outnumbered advancers by a 1.14-to-1 ratio on the NYSE. There were 147 new highs and 340 new lows on the NYSE.
On the Nasdaq, 2,021 stocks rose and 2,794 fell as declining issues outnumbered advancers by a 1.38-to-1 ratio.
Volume on US exchanges was 18.85 billion shares, compared with the roughly 20 billion average for the full session over the last 20 trading days.