Wall St climbs as fresh ME de-escalation signs lift risk appetite

NEW YORK: Wall Street’s main indexes gained broadly across sectors on Thursday as investors assessed developments in the Middle East conflict that improved risk appetite.

Israeli Prime Minister Benjamin Netanyahu said he has instructed Israel to begin peace talks with Lebanon that would also include the disarming of Hezbollah.

The comments follow Iran’s warning that no peace deal could be reached unless Israel ceased bombings on Lebanon, putting President Donald Trump’s fragile two-week ceasefire with Iran into jeopardy.

Following the news, oil prices slipped by more than USD4 a barrel, after gaining earlier in the session, with the S&P 500 energy index down 1.2 percent

“The truce may have bought some time, but it does not fully remove the risk of renewed escalation,” said analysts led by Dr. Murat Ulgen, global head of macro strategy at HSBC.

“If the ceasefire breaks down, markets would quickly have to reprice back towards a more persistent supply shock, especially if renewed disruption keeps the Strait of Hormuz effectively closed,” said Ulgen.

At 12:40 p.m. ET, the Dow Jones Industrial Average rose 247.66 points, or 0.52 percent, to 48,155.97, the S&P 500 gained 33.67 points, or 0.50 percent, to 6,816.48 and the Nasdaq Composite gained 134.55 points, or 0.60 percent, to 22,770.06.

Consumer discretionary stocks led broader gains on the S&P 500, supported by a 4.3 percent gain in Amazon.com after its CEO said AI services at its cloud-computing unit were generating annualized revenue of over USD15 billion.

Technology stocks on the S&P 500 pared declines to trade flat. Software stocks, however, were still under pressure with the iShares Expanded Tech-Software ETF down 4.2 percent.

“The Iran conflict happened and software stocks didn’t sell off as much as others… maybe there’s just some profit-taking and repositioning in those names,” said Dustin Thackeray, partner and head of portfolio management at Crewe Advisors.