Traders work on the floor of the New York Stock Exchange on April 1, 2024.
Brendan Mcdermid | Reuters
U.S. stocks rose on Monday, rebounding from last week’s sell-off following strong Goldman Sachs earnings, hot retail data and hopes that the conflict in the Middle East won’t further escalate.
The Dow Jones Industrial Average gained 370 points, or 1%. The S&P 500 climbed 0.7%, and the Nasdaq Composite advanced 0.7%.
Iran launched drones and missiles on Israel on Saturday night, marking the first direct attack on Israel from Iranian territory. While the majority of the threats were intercepted, concerns of retaliation remain.
Gold futures dipped slightly to trade at $2,369.90 an ounce. Bullion hit a record level last week and is up around 15% this year as investors seek safety from sticky inflation and geopolitical tensions.
But oil prices fell despite rising in the last few weeks prior to the attack amid growing Middle East tensions. That, along with the potential for Israel’s response to be measured given the country thwarted the attack, offered positive signs for traders.
“Historically, geopolitical shocks cause short-term volatility, not long-term market declines,” said Emily Bowersock Hill, CEO of Bowersock Capital Partners. “In this current environment, however, the risk of an extended period of volatility is higher, given the inflationary oil price shocks that may emanate from the heightened tensions in the Middle East.”
How Israel Prime Minister Benjamin Netanyahu will respond to the attack is a key outstanding question, said Krishna Guha, Evercore ISI senior managing director, in a Sunday note. The Biden administration has made it clear it does not want Israel to retaliate, he noted.
“Provided that Netanyahu looks like he is willing to follow U.S. advice, there may be some element of a relief rally in markets Monday,” Guha said. “However, our colleagues in the energy team do not expect a big retracement in the price of oil.”
Goldman Sachs popped more than 5% after beating Wall Street expectations on both lines in the first quarter. That follows several bank reports on Friday, with investors sending JPMorgan shares 6% lower amid concerns about what the financial giant may generate from lending in the year ahead.
Wall Street also got a boost from fresh economic data. Retail sales increased 0.7% for the month of March, providing the latest indication that consumption remains strong in spite of inflationary pressures. That pace was higher than the 0.3% consensus forecast of economists polled by Dow Jones.
Monday’s action also comes of the heels of a tough week on Wall Street, as lingering inflation concerns and a poor start to the new corporate earnings season weighed on traders. Both the Dow and S&P 500 saw their worst weekly performances since 2023.