Trump says Israel, Iran agree to ceasefire
President Donald Trump says Israel and Iran agreed to a cease-fire after Iran retaliated for U.S. strikes on three nuclear facilities.
U.S. stocks closed sharply higher as investors grew optimistic that the Israel-Iran conflict would remain contained and oil supply intact.
The broad S&P 500 index ended less than 1% from its record closing high reached on Feb. 19.
President Donald Trump announced a Middle East ceasefire that was quickly violated by both Israel and Iran. Within hours, Israel said it detected a missile launch from Iran. Iran denied firing missiles at Israel after the ceasefire came into force.
Trump demanded in a social media post that Israel stop dropping bombs to save the truce. He later told reporters he still believes the truce will hold.
The blue-chip Dow closed up 1.19%, or 507.24 points, to 43,089.02; the S&P 500 added 1.11%, or 67.01 points, to 6,092.18; and the tech-heavy Nasdaq advanced 1.43%, or 281.56 points, to 19,912.53. The benchmark 10-year Treasury yield dropped to 4.296%.
Oil prices, which recently had risen on fears the Israel-Iran conflict would escalate and disrupt global oil supplies, tanked, which gave stocks another leg up. U.S. oil was last down 5.18% at $64.96 per barrel, around where they were before the Israel-Iran conflict began.
With the Israel-Iran clash contained and oil supplies safe, analysts now expect oil prices to resume their downtrend. Weaker oil demand from China and additional supply from oil producing countries will contribute to a sizeable surplus over the next 18 months, said David Oxley, chief climate and commodities economist at Capital Economics.
“From a market standpoint, this situation remains all about oil and as long as the flow of the 20 million barrels per day out of the Gulf is not materially disrupted, then oil prices are not likely to sustainably rise and this situation will not dramatically impact U.S. markets,” said Tom Essaye, founder of the Sevens Report.
Trump also said in a social media post that China can keep buying oil from Iran, seen as another sign of easing tensions with Iran. Part of Trump’s “maximum pressure” campaign against Iran had included sanctioning Chinese refineries, port operators and other companies for importing Iranian crude. About 90% of Iranian crude is sold to China. Oil prices slid further on the comments.
Over the past two days, U.S. oil prices have fallen around 12%.
With the unlikelihood of Iran closing the Strait of Hormuz, the largest transportation route for global oil supplies, investors turned to Federal Reserve Chairman Jerome Powell’s two-day testimony to Congress for clues on interest rates.
Investors shrugged off a report this morning showing consumer confidence deteriorated this month. Pessimism toward the jobs market fell to its lowest level since March 2021.
Still waiting to see
At Powell’s two-day testimony before Congress on the economy, Powell continued to held on to his “wait-and-see” approach. He said the central bank remains focused on making sure any one-time increases in prices from higher tariffs won’t turn into an “ongoing inflation problem.”
Trump has been hounding Powell to lower rates immediately. Lower rates reduce the cost of borrowing, which usually encourages spending. More spending is seen as a boost for the economy and the stock market.
While Powell spoke in Washington, D.C., New York Fed President John Williams struck a similar tone on rates. He said current policy is appropriate, as “it allows for time to closely analyze incoming data.”
Federal Reserve Bank of Minneapolis President Neel Kashkari also said at an event in La Crosse, Wisconsin, the Fed needs more clarity on how tariffs will impact prices before adjusting policy.
Those comments contrast with other Fed members who have said they are open to rate cuts. Fed Governor Michelle Bowman signaled support for a potential rate cut as soon as July. She said risks to the labor market could rise, but inflation appears to be still headed toward the Fed’s 2% goal.
Her comments echoed those of Fed Governor Christopher Waller last week. He suggested the central bank could lower interest rates as soon as next month because he believes inflation from tariffs is likely to be short-lived.
Chicago Fed President Austan Goolsbee has said the Fed could resume rate cuts if the inflation from tariffs remains subdued but didn’t offer a timeframe for a potential rate cut.
Corporate news
- KB Home topped second-quarter quarterly estimates but lowered its full-year housing revenues guidance. Shares reversed early gains to end slightly lower.
- Chewy said it plans to sell $1 billion of its Class A common stock through JPMorgan. It also announced a $100 million share repurchase program. Shares of the pet retailer edged up.
- Carnival topped second-quarter estimates and raised its full-year guidance for several metrics. The cruise line operator’s shares jumped 6.91%.
- Uber and Waymo launched a self-driving taxi service in Atlanta. The ride-share company’s stock rose 7.52%.
- Chip designer Ambarella has held talks with bankers and is considering putting itself on the auction block, according to Bloomberg. Shares soared 20.61%.
Cryptocurrency
Metaplanet Inc., a publicly listed bitcoin treasury company based in Japan, said it will inject an additional capital contribution of up to $5 billion to its wholly owned U.S. subsidiary, Metaplanet Treasury Corp, to expand its global bitcoin treasury strategy.
Separately, ProCap Financial said it has raised more than $750 million and is going public through a special purpose acquisition company, or SPAC, with Columbus Circle Capital Corp. I. The new firm plans to hold up to $1 billion in bitcoin and offer services like lending, trading, and capital markets.
And, crypto firm Digital Asset raised $135 million in a funding round backed by major financial institutions including Goldman Sachs, BNP Paribas and Ken Griffin’s Citadel Securities. The company plans to use the money to advance Canton Network, a public blockchain designed for financial institutions to move assets and data around while meeting regulatory and privacy requirements.
Bitcoin was last up 0.13% at $105,573.80.
(This story was updated with new information.)
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
