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Stocks Rally Despite Early Losses
U.S. stocks recovered from sharp intraday losses Thursday, with investors navigating escalating geopolitical risks from the Middle East. The S&P 500 Index closed with a modest 0.1% gain, while the Nasdaq 100 Index also finished 0.1% higher, showing resilience by erasing significant earlier downturns.
Oil Prices Skyrocket on Strait of Hormuz Concerns
West Texas Intermediate crude oil experienced a dramatic 12% surge, reaching around $112 per barrel. This sharp rise was driven by reports that Iran is drafting a protocol with Oman to monitor traffic through the critical Strait of Hormuz. A potential move involving tolls for shippers could severely disrupt global energy supplies through this vital waterway.
Analysts Weigh Market Outlook
Analysts pointed to differing views on market focus. Adam Turnquist, chief technical strategist for LPL Financial, noted that stock markets seemed to be looking past immediate oil price risks, focusing instead on the potential reopening of the Strait. He cautioned, however, that with oil prices driving investor appetite for risk, the sustainability of stock market gains remains vulnerable.
Uncertainty Drives Market Sentiment
James McCann, senior economist at Edward Jones, highlighted ongoing uncertainty about how long global energy supply disruptions might last. He predicted that market sentiment will remain driven by headlines, leading to elevated volatility and a challenging short-term outlook for investors.
Corporate News and Economic Data Add Complexity
Adding complexity, Blue Owl Capital Inc. announced it would limit redemptions from some private credit funds after a surge in withdrawal requests, causing its shares to slide. Tesla Inc. shares also fell after reporting its worst sales quarter in years, missing Wall Street expectations in a tough EV market. Mixed economic data also added to the uncertainty, with job-cut announcements rising 25% in March, though initial jobless claims unexpectedly decreased.