Wall Street Gains Ground After Friday’s Turbulence
Calm is returning to Wall Street as U.S. stocks rise on Monday. This comes as oil prices recede after their initial surge following Israel’s recent attacks on Iranian nuclear and military targets.
In early trading, the S&P 500 was up by 0.7%, poised to recover more than half of its decline from Friday. Similarly, the Dow Jones Industrial Average increased by 280 points or 0.7%, and the Nasdaq composite climbed by 0.9%. This upward trend in stock prices is mirrored globally, stretching from Asia to Europe.
Despite ongoing exchanges between Israel and Iran, concerns about a broader conflict that could disrupt Iran’s oil exports remain. Historically, conflicts in this region have only caused temporary spikes in crude oil prices. Prices typically stabilize once it’s clear that oil shipping routes, especially through the Strait of Hormuz, remain unaffected.
Hopes for a contained conflict this time led to a 1.6% drop in the price of a barrel of benchmark U.S. oil, bringing it to $71.82 on Monday. Meanwhile, Brent crude fell 1.7% to $72.97. Both had experienced approximately 7% jumps last Friday following the attacks.
Further signifying easing tensions, gold prices also retracted some of Friday’s sharp increase. Investors had turned to gold as a safe haven amidst uncertainties. An ounce of gold slipped 0.5% to $3,433.90.
Wall Street’s concerns extend beyond the Middle East tensions, with significant focus on President Donald Trump’s tariffs. These tariffs risk slowing economic growth and increasing inflation if international trade agreements do not alleviate the taxes on imports.
Currently, the United States is holding discussions with six major global economies in Canada at the Group of Seven meeting, with tariffs being a prominent agenda item.
Additionally, later in the week, all eyes will be on the Federal Reserve as they deliberate on the direction of interest rates, with a decision expected on Wednesday. Although the Federal Reserve has been cautious with rate adjustments, remaining steady this year post-year-end cuts, they are monitoring the tariffs’ impacts on the economy and inflation.
Inflation remains modest and close to the Federal Reserve’s 2% target. While reducing rates could potentially stimulate the economy by encouraging borrowing, it also carries the risk of accelerating inflation.
In the bond markets, the 10-year Treasury yield went up to 4.43% from 4.41% late Friday. Meanwhile, the two-year Treasury yield remains stable at 3.96%, reflecting expectations regarding the Federal Reserve’s future interest rate decisions.
Internationally, stock markets showed moderate gains across Europe and more substantial increases in much of Asia.
In particular, Hong Kong’s stocks rose by 0.7% and Shanghai saw a 0.3% increase, following stronger Chinese consumer spending data for May and slower growth reports in factory activity and investment.
Likewise, South Korea’s Kospi surged by 1.8%, and Japan’s Nikkei 225 recorded a 1.3% rise, marking some of the more significant gains worldwide.
