Wall Street rebounds after recent selloff with Mideast conflict in focus

By Purvi Agarwal and Twesha Dikshit

March 30 (Reuters) – Wall Street’s main indexes gained in choppy trading on Monday after logging sharp declines in the previous session, as investors took heart from President Donald Trump’s comments on U.S.-Iran talks even as the Middle East conflict widened.

Trump said the U.S. was in serious discussions with a “more reasonable regime” to end the war, but repeated his warning to open the Strait of Hormuz or risk U.S attacks on Iranian oil wells and power plants.

Yemen’s Iran-backed Houthi militia entered the war over the weekend, escalating the conflict.

The S&P 500 Energy Index added 0.9% with Exxon Mobil and Chevron up 2.1% and 1.3%, respectively.

“It’s the sense that there’s negotiations going on and if that’s the case, there may be some resolution…When the markets get oversold, they will grasp for any potential positive catalyst and that’s where we are today,” said Art Hogan, chief market strategist at B Riley Wealth.

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.

At 11:31 a.m. ET, the Dow Jones Industrial Average rose 324.12 points, or 0.72%, to 45,491.47, the S&P 500 gained 19.64 points, or 0.31%, to 6,388.49 and the Nasdaq Composite gained 9.79 points, or 0.05%, to 20,958.15.

The financial index gained 1.7% after the U.S. Department of Labor 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 up 4.4%, KKR up 3.7% and Apollo Global Management gaining 3%.

Heavyweight tech stocks on the S&P 500 dipped 0.5%, led by Apple and Broadcom, limiting gains on the S&P 500 and the Nasdaq. The broader semiconductor index fell to a three-month low, last down 2.7%.

Federal Reserve Chair Jerome 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.

A slew of labor market data, including the nonfarm payrolls figures for March, will be released this week and is expected to provide more insight into the health of the economy.

Wall Street brokerage Morgan Stanley downgraded global equities to “equal weight” from “overweight”, but said fund flows to U.S. equities and bonds had overtaken the rest of the world since the conflict began, indicating it might re-emerge as a safe haven for investors.

Among other movers, Sysco’s shares dropped 12.4% after the food distributor said it would buy catering supplier Jetro Restaurant Depot in a $29 billion deal, including debt.

Shares of aluminum producers climbed as prices of the metal were trading at around four-year peaks. Alcoa and Century Aluminum gained 11.4% and 9.9%, respectively.

Advancing issues outnumbered decliners by a 2.12-to-1 ratio on the NYSE and by a 1.21-to-1 ratio on the Nasdaq.

The S&P 500 posted 19 new 52-week highs and 6 new lows while the Nasdaq Composite recorded 19 new highs and 233 new lows.

(Reporting by Purvi Agarwal and Twesha Dikshit in Bengaluru; Editing by Devika Syamnath and Shinjini Ganguli)