(April 20): US stocks fell on Monday as weekend developments in the Middle East war dimmed prospects for peace talks between the US and Iran.
The S&P 500 Index declined 0.3% at 9:40am in New York, putting the benchmark on track to snap a five-session winning streak. The tech-heavy Nasdaq 100 Index fell 0.3%. Brent crude surged 3.7% to around US$94 a barrel, while the Cboe Volatility Index hovered at 19.
“The market has flipped the script,” said Jay Woods, chief market strategist at Freedom Capital Markets. “This has really been a weird market. Usually it’s the stairs up and elevator down. This time it’s been the opposite.”
Iran wavered on whether to send diplomats to Pakistan for another round of peace talks after the US upheld a blockade of the Strait of Hormuz and seized an Iranian ship. Both President Trump and Iranian officials offered disparate views on the next stage of the war.
The uncertainty comes after Iran said it would reopen the critical waterway on Friday, helping the S&P 500 continue a rally that has erased war-driven losses and return to record highs. But the Islamic Republic reversed the decision over the weekend after the US refused to lift its blockade, and the US Navy then fired upon and boarded an Iranian-flagged cargo ship.
Wednesday will be critical, with the ceasefire set to expire. Trump, who predicted good prospects for a permanent deal between the US and Iran last week, has adopted a different tone. On Sunday, the US leader threatened to “knock out every single Power Plant, and every single Bridge, in Iran.”
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“Markets are once again grappling with a rapidly shifting narrative in the Middle East, as the past 48 hours have delivered both optimism and renewed concern,” said Daniela Hathorn, senior market analyst at Capital.com, adding that the market feels “stuck at a crossroads” as a result of the jostling.
In addition to developments on the Iran war, traders will be keeping an eye on the release of economic data throughout the week, including retail sales, initial jobless claims and consumer sentiment data.
Furthermore, Trump’s pick for Federal Reserve chair, Kevin Warsh, will have a confirmation hearing on Tuesday.
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“This is a market moving event,” said XTB’s Kathleen Brooks. “Investors and traders will be eagerly watching to see what Warsh has to say about inflation and the direction of monetary policy.”
In single-stock moves, AST SpaceMobile Inc plunged in premarket trading after Blue Origin’s flagship New Glenn rocket failed to correctly place a payload it was carrying for the Texas-based satellite networking company into its intended orbit.
Meanwhile, Marvell Technology Inc rose after The Information reported that Google was in discussions with the semiconductor company to develop two new chips to run artificial-intelligence models more efficiently.
Sectors to watch
- Magnificent Seven shares fell after tensions reignited in the Middle East over the weekend, casting doubts over planned peace talks.
- Shares of companies involved in psychedelic-related therapies are surging in pre-market trading Monday after President Donald Trump signed an executive order to expedite research and access.
Uploaded by Magessan Varatharaja
