Trump says Iran war "close to over" amid hopes for more negotiations
By Isla Binnie and Amanda Cooper
NEW YORK/LONDON, April 14 (Reuters) - The S&P 500 flirted with a record closing high and other Wall Street indexes advanced on Tuesday, as prospects for new peace talks between the United States and Iran also pulled down oil prices and the U.S. dollar.
U.S. President Donald Trump said talks could resume in Pakistan over the next two days, after breaking down over the weekend. Pakistani and Iranian officials also said negotiations could restart, with the agenda including transit through the vital Strait of Hormuz as well as Iran’s nuclear activity and international sanctions.
According to preliminary data, the S&P 500 gained 1.17%, to end at 6,966.78 points. This compared with its record closing level of 6,978.60 in late January.
The blue chip index had closed out Monday’s session above its level before the U.S.-Israeli war on Iran began.
The Dow Jones Industrial Average rose 0.66%, to 48,535.39, while the Nasdaq Composite gained 1.95%, to 23,635.92.
"We don’t have a resolution yet but investors don’t want to miss the rebound," said Burns McKinney, portfolio manager at NFJ Investment Group, Dallas.
Europe’s STOXX 600 has recovered ground and rose 0.99% on the day, but stayed below its close on February 27, the day before the U.S. and Israel launched strikes on Iran.
The International Monetary Fund cut its global growth outlook on Tuesday.
A run of financial firms’ earnings included $14 trillion asset manager BlackRock , which reported rising first-quarter profit that pushed its stock up more than 3%, recouping some of its losses so far this year.
Citigroup (N:C) beat first-quarter profit estimates and its shares rose more than 3%. JPMorgan also beat expectations but its stock lost 0.8%.
DOLLAR DIPS
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, has fallen to within striking distance of its late February levels, sliding 0.24% on Tuesday to 98.10.
The dollar’s safe-haven status had been nudging the currency higher since the outset of hostilities. But on Tuesday it dropped as low as 97.978, its weakest since the first trading day after the war began.
"You have very clear guidance coming from the Trump administration that they’re looking for an exit ramp here and that’s playing into market expectations that there will eventually be a symbolic deal between the U.S. and Iran that allows attacks to cease and for Iran to let the strait reopen," said Karl Schamotta, chief market strategist at Corpay in Toronto.
Inflation data from the U.S. Labor Department weighed further on the dollar, with the Producer Price Index (PPI) for final demand showing a rise of 0.5% last month, below the 1.1% increase forecast in a Reuters poll of economists.
OIL BACKS DOWN
Oil prices fell as expectations for further dialogue to end the war outweighed concerns over supply disruptions.
Brent crude futures settled at $94.79 a barrel, down $4.57, or 4.6%. U.S. West Texas Intermediate crude finished at $91.20, down $7.80, or 7.87%.
Both benchmarks had been trading above $100 a barrel just a day earlier, when the U.S. began a blockade of Iran’s ports, angering Tehran and adding uncertainty about flows through the Strait of Hormuz.
A Bank of America survey of global fund managers conducted in the first week of April showed investors expect oil to be priced at $84 by the end of the year.
TREASURIES FIRM BUT INFLATION REMAINS A CONCERN
U.S. Treasuries firmed on optimism the war could wind down soon, although trading remained subdued.
Yields, which move inversely to prices, drifted lower, with the two-year yield last down 3.4 basis points at 3.747% and the benchmark 10-year yield slipping 4.9 basis points to 4.248%. [US/]
Two-year Treasury yields, which typically move in step with expectations for interest rate cuts from the Federal Reserve, are nevertheless more than 35 basis points higher than their late February levels, as rising energy prices fuel inflation concerns. Those have prompted investors to prepare for the possibility that major central banks reverse their previously expected course towards cuts or pauses this year, and instead tilt towards hikes.
