Wall Street indexes gain as investors hold out hope for US-Iran resolution

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By Sinéad Carew and Niket Nishant

April 13 (Reuters) – The S&P 500 and the Nasdaq composite indexes rallied more than 1% 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 the Nasdaq and the S&P 500 picked up some steam on Monday afternoon after U.S. President Donald Trump said that Iran wants to make a deal nS0N3ZS00G 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 nL6N40V09S, while Tehran threatened to retaliate against ports of its Gulf neighbours after weekend talks on ending the war https://www.reuters.com/world/iran/ broke down.

“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.

“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 $100 level nL1N40V07F. Chicago Federal Reserve President Austan Goolsbee nSPN40W00D 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.

By Monday’s close the S&P 500 had erased all its losses after the war began as it closed 0.1% above its February 27 finish.

The S&P fell as much as 7.8% from pre-war levels since the hostilities began in late February.

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%.

GOLDMAN RESULTS UNDERWHELM

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 nL4N40W0SE.

“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 nL4N40W0T3 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.

TRAVEL STOCKS FALL

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 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 nL1N40T0SK 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.

(Reporting by Sinéad Carew in New York, Niket Nishant and Avinash P in Bengaluru; Editing by Shilpi Majumdar, Devika Syamnath)