The stock market experienced a surge of optimism early this week as a sharp decline in oil prices eased concerns about a potential escalation of the Middle East conflict and its impact on the global economy. The S&P 500 gained 0.3%, mirroring the performance of the tech-heavy Nasdaq 100, while the Dow Jones Industrial Average added 0.6%.
This bullish sentiment was particularly pronounced in the small-cap segment of the market. The Russell 2000 index, which tracks small-cap stocks, soared 1.5%, rebounding from a recent period of losses. This move suggests that investors are becoming more confident about the overall economic outlook, with small-cap companies often seen as more sensitive to economic cycles.
The catalyst for the market’s rebound was the sharp decline in oil prices. West Texas Intermediate (WTI) crude, a benchmark for U.S. oil, dropped over 5% in midday New York trading, experiencing its most significant one-day decline since July 2022. This drop was driven by Israel’s decision not to target Iran’s oil facilities during recent weekend attacks, easing fears of a potential disruption to global oil supply chains.
The decline in oil prices also sent natural gas prices plummeting. Henry Hub prices fell more than 9%, poised for their steepest single-session loss since mid-January. The energy sector was the only one to close in the red on Monday, with the Energy Select Sector SPDR Fund (XLE) falling 0.8%.
Despite the significant drop in energy prices, Treasury yields continued their upward climb. This upward movement in yields could potentially temper the market’s bullish momentum. Investors remain cautious about further U.S. fiscal policy deterioration as the election season approaches. Yields on 10-year Treasury bonds rose by 5 basis points to 4.29%, aiming for their highest close since July 11.
Gold prices held steady around $2,745 per ounce, showing no gains since last Tuesday’s close.
Sentiment in cryptocurrency markets remained bullish, with Bitcoin (BTC/USD) up 1.4% to over $68,000, reaching a one-week high. Dogecoin (DOGE/USD) jumped 4.5% in its third consecutive session of gains, eyeing the highest levels since June.
Monday’s Performance In Major US Indices, ETFs
| Major Indices | Price | 1-day % change |
|—|—|—|
| Russell 2000 | 2,242.10 | 1.5% |
| Dow Jones | 42,381.18 | 0.6% |
| S&P 500 | 5,828.13 | 0.3% |
| Nasdaq 100 | 20,409.47 | 0.3% |
ETF Performance:
* The SPDR S&P 500 ETF Trust (SPY) rose 0.54% to $581.22.
* The SPDR Dow Jones Industrial Average (DIA) rose 0.7% to $424.02.
* The tech-heavy Invesco QQQ Trust Series (QQQ) edged 0.2% higher to $496.42.
* The iShares Russell 2000 ETF (IWM) rose 1.7% to $222.55.
* The Financial Select Sector SPDR Fund (XLF) outperformed, up by 1.1%.
* The Energy Select Sector SPDR Fund (XLE) lagged, down 0.8%.
Monday’s Stock Movers
Airlines and cruise line stocks rallied as oil prices declined.
* American Airlines Group Inc. (AAL) was up by 4.5%.
* Delta Air Lines Inc. (DAL) was up by 4%.
* United Airlines Holdings Inc. (UAL) was up 3.5%.
* Carnival Corp. (CCL) was up 4.5%.
* Norwegian Cruise Line Holdings Ltd. (NCLH) was up 2.8%.
* Royal Caribbean Cruises Ltd. (RCL) was up 0.9%.
Stocks reacting on earnings reports included:
* ON Semiconductor Corp. (ON), up 4.4%.
* CenterPoint Energy Inc. (CNP), up 1%.
Large-cap companies slated to report their earnings after the close include:
* Waste Management Inc. (WM)
* Cadence Design Systems Inc. (CDNS)
* Brown & Brown Inc. (BRO)
* F5 Inc. (FFIV)
The market’s performance this week highlights the delicate balance between optimism driven by easing geopolitical tensions and concerns about broader economic headwinds. As investors navigate this complex landscape, the focus remains on key economic indicators, upcoming earnings reports, and the unfolding political landscape.
