Wall St gains as Iran ceasefire extension and robust earnings bring relief

NEW YORK: Wall Street’s main indexes climbed on Wednesday after US President Donald Trump extended the ceasefire with Iran, even as uncertainty remained over whether Tehran and US ally Israel would honor the truce.

Trump said the indefinite extension of the ceasefire followed a request by Pakistani mediators. However, the US Navy’s blockade of Iranian ports remained in effect, and Iran seized two ships in the Strait of Hormuz.

The opening of the waterway, responsible for about 20 percent of global oil supply, remains a major unknown for investors and has been one of the sticking points in the negotiations.

The bullish sentiment despite the uncertainty points to a market desperate to cling to good news, and reflects investor belief that despite setbacks, the war will be settled at the negotiating table instead of the battlefield.

At 11:25 a.m. ET, the Dow Jones Industrial Average rose 381.18 points, or 0.78 percent, to 49,530.56, the S&P 500 gained 61.56 points, or 0.87 percent, to 7,125.15 and the Nasdaq Composite gained 313.74 points, or 1.29 percent, to 24,573.70.

“It’s possible that we see a continuation of negative headlines, ultimatums and deadlines for negotiations, but that doesn’t mean that stocks will react meaningfully to each one, since markets already priced in the worst of the conflict during the lows made back in March,” said Rick Gardner, chief investment officer, RGA Investments.

However, risks of an inflation flare-up remain, with oil prices near the USD100-a-barrel mark.

“Equity markets appear to be pricing in a rapid resolution — and conditions on the ground suggest that may be premature,” said Larry Adam, chief investment officer at Raymond James.

Information technology stocks added 1.6 percent and were the biggest boost to the S&P 500. Energy stocks also rose 0.8 percent.

The Philadelphia SE Semiconductor Index hit a fresh peak and was on track for its 16th straight day of gains — its longest streak ever.

Micron Technology shares jumped 5.6 percent, while Seagate rose 2.5 percent after Barclays upgraded the data storage firm’s rating to “overweight”.

A strong run of earnings so far has reassured Wall Street about the health of the US consumer, the growth engine of the economy.