Stocks Gained & Oil Sank as Iran’s Telegraphed Retaliation caused Minimal Damage – US Market Wrap

Wall Street traders pushed stocks higher as oil fell, as Iran’s retaliatory strikes on a US air base in Qatar were largely expected and unlikely to cause a broader economic fallout. The dollar fell.

The S&P 500 climbed 1% after Qatar said it intercepted the Iranian attacks with no casualties. West Texas Intermediate fell below $70 as fears that the conflict would disrupt Middle Eastern supplies subsided. Bond yields fell as fears of an impending inflationary threat subsided. Money markets increased bets on policy easing after Federal Reserve Governor Michelle Bowman signaled support for a rate cut as early as July.

Iran’s missile attack on a US air base in Qatar was predicted well in advance, reducing the risk of a larger escalation following US airstrikes over the weekend. A controlled geopolitical response, in turn, may reduce the likelihood of a larger supply-chain disruption.

The Middle East accounts for roughly a third of global crude production, and there have been no signs of disruption to physical oil flows, including cargoes passing through the Strait of Hormuz. Since Israel’s attacks started earlier this month, there have been indications that Iranian oil shipments out of the Gulf have increased rather than decreased.

Oil prices traded in a $10-a-barrel range on Monday, rising by more than 6% before falling even further, demonstrating how volatile traders are and how important every development in the region is to global energy markets.