Stocks End Mixed As Middle East Headlines Dominate Stocks closed mixed yesterday with the big 3 indexes off moderately, while the small-cap Russell 2000 and mid-cap S&P 400 were up 0.45% and 0.75% respectively. All of the major indexes are still in pullback territory (defined as a decline between -5% and -9.99% from their all-time high close). But the small-caps and mid-caps are back in the plus column YTD with the Russell up 0.95% and S&P 400 up 2.41%. (The Dow is down -4.03% YTD, the S&P 500 is down -4.22%, and the Nasdaq is down -6.37%.) The indexes hit their best levels a couple of times throughout the day, but sold off in the last hour of trading. Concerns over the impending deadline (the U.S. delayed striking Iran's powerplants for 5 days while talks continue) weighed on stocks. Skepticism has surrounded the negotiations given Iran's initial denial they ever happened. But they have since admitted that communications have and are taking place. And the White House said that Iran has given the U.S. a "very significant" gift (related to oil), with President Trump saying Iran wants to "make a deal." It was also reported late in the day that the U.S. has sent Iran a 15-point peace plan via mediator Pakistan. At the moment, the deadline for a deal is Saturday. In the meantime, oil was up roughly 4% yesterday. The Valero Port Arthur refinery explosion in Texas on Monday, didn't help matters, as that will take 435,000 barrels of refinery capacity offline. In other news, the PMI Composite report showed the Index at 51.4 vs. last month's 51.9. The Manufacturing Index rose to 52.4 vs. last month's 51.6 and views for 51.0. And the Services Index came in at 51.1 vs. last month's 51.7. And the Richmond Fed Manufacturing Index improved to 0 vs. last month's -10. Today we'll get MBA Mortgage Applications, Retail and Wholesale Inventories, Import and Export Prices, and the EIA Petroleum Status report. Separately, OpenAI reported that they have closed down their short-form video app Sora, in an effort to cut costs and focus on their core businesses, as they prepare for their planned IPO, which could come by the end of the year. The market will continue to be influenced by Middle East headlines – good and bad. But eventually, the conflict will end. And the underlying bullish fundamentals of the market, including the projected double-digit EPS growth forecast for each of the next 4 quarters, will once again be the focus. And that should send the market to new highs. See you tomorrow, Kevin Matras Executive Vice President, Zacks Investment Research |
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