(April 17): US stocks held onto record highs as traders digested a flurry of headlines on the conflict in the Middle East, brushing aside warnings that the US-Iran war would continue to linger for months.
The S&P 500 edged up 0.3%, notching another all-time high after the benchmark closed above the 7,000 mark for the first time on Wednesday. President Donald Trump said prospects for a deal with Iran are “looking very good.” He said he believed Iran had agreed to terms it has long resisted, including giving up ambitions for a nuclear weapon. Tehran has not publicly confirmed it’s made those concessions.
Trump also announced a 10-day ceasefire between Israel and Lebanon. His announcement on Thursday made no mention of Hezbollah. Israeli Prime Minister Benjamin Netanyahu confirmed in a video message that he’d agreed to the truce. The update eased fears of a wider regional conflict that could threaten oil shipments through the Strait of Hormuz, a critical chokepoint for global energy supplies.
The Nasdaq 100 climbed 0.5% to a record high. The early hours of Thursday’s session saw a sharp rally in technology stocks after Taiwan Semiconductor Manufacturing Co.’s upbeat revenue outlook highlighted the resilience of AI chip demand. The gain marked the benchmark’s longest winning streak since 2017.
Brent crude traded around US$98.15 a barrel after approaching nearly US$100 when some Gulf Arab and European leaders indicated that a US-Iran peace deal will take about six months to be reached, according to people familiar with the matter. Treasury yields rose modestly, with the rate on the benchmark 10-year at 4.31%.
“This is yet another sign of headline fatigue as it relates to the war in the Gulf region,” according to BMO’s Ian Lyngen. “The prevailing consolidation pattern is also suggestive that the influence of fresh geopolitical headlines is waning.”
See also: US stocks advance on Trump truce extension and earnings
Adding to market concerns, former Treasury Secretary Henry Paulson called on US authorities to prepare a back-up plan in order to avert a potential collapse in demand for the US$31 trillion market for US government debt — an event that he warned would have “vicious” effects.
Meanwhile, delegates at the International Monetary Fund and World Bank meetings in Washington have cautioned that markets are underestimating the war’s economic damage.
“Investors have become conditioned to buy every dip,” said Michael Bell, head of market strategy at RBC BlueBay Asset Management. “The outlook is binary, either Hormuz reopens soon or it doesn’t. With equity markets already assuming Hormuz will reopen soon, the upside is perhaps limited.”
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Microsoft Corp. outperformed among the Magnificent Seven with a 2% advance. Tesla Inc. slumped on news that the firm’s Cybertruck sales have been propped up by Elon Musk’s other companies, including SpaceX. Allbirds Inc tumbled after soaring on Wednesday.
Claudia Panseri of UBS Wealth Management said her exposure to artificial intelligence stocks is focused on the US and China and is “more selective” than two years ago. “We also prefer companies which are still investing using cash, rather than companies issuing bonds,” Panseri told Bloomberg Television.
In economic data, initial jobless claims for the week through April 11 fell more than expected, reinforcing investor confidence in the economy’s resilience.
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