US stocks rebounded on Monday as concerns surrounding Iran’s attack on Israel subsided, allowing investors to shift focus back to earnings season and inflation risks. The S&P 500 and the Dow Jones Industrial Average each rose by roughly 0.5%, with the tech-heavy Nasdaq Composite climbing by 0.4%. The initial fears of a potential full-blown war in the Middle East eased as efforts by the US to calm tensions between Iran and Israel were successful, leading to a positive market sentiment.
The recent pressure on stocks was attributed to lackluster start to earnings season and concerns over inflation levels failing to meet the Federal Reserve’s 2% target. As traders scaled back expectations of interest rate cuts this year, retail sales in March showed an unexpected increase of 0.7%, surpassing economist forecasts. Goldman Sachs boosted investor confidence after reporting a significant profit increase, helping to revive the early 2024 equity rally.
In the commodities market, oil prices fell more than 1% following Iran’s missile strike, signaling relief from supply disruption concerns. The 10-year Treasury yield added about 10 basis points to trade near 4.61%, attempting to return to last week’s five-month high. The market reaction to these developments reflects the delicate balance between geopolitical risks and economic factors, influencing investment decisions in a volatile trading environment.
