US stocks: Wall Street indexes end mostly lower as investors weigh Middle East conflict outlook

US STOCKS ended mostly lower on Monday as US President Donald Trump’s new warning to Teheran and a widening of the Middle East war offset optimism over his comments on US discussions with Iran.

Trump said the US was in serious discussions with a “more reasonable regime” to end the war, but repeated his threat to open the Strait of Hormuz or risk US attacks on Iranian oil wells and power plants. Iran described US peace proposals as unrealistic.

Investors have been focused on how oil prices will impact the global economy after they shot up since the start of the war.

“The administration continues to send mixed messages,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

“When the messages seem good, to the extent they are believed, it helps the market. If something they say implies a more aggressive approach, the market sells off.”

At the same time the conflict has been escalating. Yemen’s Iran-backed Houthi militia entered the war over the weekend.

All three of the major indexes started the day higher after logging sharp declines in the previous session. Since the war started, the Dow, the Nasdaq and the small-cap Russell 2000 have all confirmed correction territory, ending 10 per cent lower from their record-high closes.

According to preliminary data, the S&P 500 lost 25.52 points, or 0.4 per cent, to end at 6,343.33 points, while the Nasdaq Composite lost 153.16 points, or 0.73 per cent, to 20,795.20. The Dow Jones Industrial Average rose 53.27 points, or 0.12 per cent, to 45,219.91.

Comments from Federal Reserve Chair Jerome Powell gave some support to stocks. Powell said longer-term inflation expectations appear to be holding despite the current energy shock, and the Fed does not yet need to make a decision on how to react to the latest troubles. Both US crude oil and Brent settled higher.

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Money market participants have priced out any easing from the Federal Reserve this year, compared with two cuts expected before the war began, per the CME Group’s FedWatch Tool. The S&P 500 energy index was down slightly and technology stocks were among the biggest drag on the S&P 500.

On the flip side, the financial index gained after the US Department of Labor issued long-awaited guidelines intended to clarify how trustees can add alternative assets to 401(k) retirement plans.

Shares of asset managers climbed with Blackstone and KKR both higher. REUTERS