Although the US president's statements seem like April Fools' jokes, Wall Street investors take the possibility of ending the war with Iran seriously. Wednesday was therefore the second day of rebound on the previously oversold market. Quite good data from the American economy also helped.
The S&P500 index increased by 1.16% on Wednesday and reached 6,575.32 points. This was a continuation of the strong rebound from Tuesday, when the S&P500 gained almost 3% and jumped from its 7-month low. In two days, the S&P500 recovered from the losses of the previous three sessions.
The Nasdaq Composite increased by 1.16% and reached 21,840.95 points. The Dow Jones industrial average gained 0.48% and reached 46,565.74 points. The VIX volatility index continued to decline. Crude oil has also fallen, and on the western side of the Atlantic it now costs less than USD 100 per barrel. For the second day in a row, gold prices rose quite significantly (by 2.5%).
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Everything still revolves around the war with Iran and numerous – although often contradictory – statements by President Donald Trump. On Wednesday, the leader of the United States spoke in a rather peaceful and (at least for him) measured manner.
– The president of the new Iranian regime, much less radicalized and much more intelligent than his predecessors, has just asked the US for a CREASE! We will consider (it) when the Strait of Hormuz is open, free and clear. Until then, we will continue to attack Iran until it sinks into oblivion, or as they say, returns to the Stone Age!!! – Trump wrote on Truth Social.
On Wednesday at 9 p.m. local time (i.e. 3 a.m. in Poland), President Trump will address the nation “with important information about Iran,” the White House announced. On Tuesday, Trump announced that the operation against Iran would last another two to three weeks. He also assessed that the Iranians wanted to conclude an agreement with the US.
– We have Trump's comments that seem to be changing a little bit. Everyone is trying to guess what he really means when he says this. The market wants to think positively and wants the war to end – this is how Thomas Martin, senior manager at Globalt Investments, commented on the mood on Wall Street, quoted by Reuters.
All market sectors were green, except for oil companies. Exxon's shares fell by over 5% and Chevron's by 4.6%. The American energy sector was – and will continue to be for some time – the main economic winner apart from the arms companies) of the war in the Middle East.
Stock market optimists were also not disturbed by the data from the US economy published on Wednesday. The ADP report showed that in March the private sector added 62,000 jobs. full-time positions, which is more than half as much as analysts' modest expectations (+40,000). This generally weak result, however, suggests that fears of a recession in the US may be somewhat exaggerated for now. Especially since February's retail sales showed solid performance, increasing by 0.6% m/m and 3.7% y/y. Economists estimated that after the January decline of 0.1% month-on-year, sales in February would increase by 0.5% month-on-year.
Very positive data came from the industry. The ISM index (the American progenitor of the PMI) for the manufacturing sector increased from 51.6 points. to 52.3 points, reaching the highest value in nearly 4 years and signaling an acceleration in the growth of economic activity in industry. Although the very high price growth rate (the highest since June 2022) and the slower growth rate of new orders could be disturbing, in general this part of the American economy seems to be doing quite well.
It is also worth mentioning that after the March correction, valuations on Wall Street became slightly more reasonable. Admittedly, it is still quite expensive. The p/z ratio of companies based on expected profits dropped only to 20, but this is clearly less than the over 23 seen in late autumn. The market turned around from a slightly lower valuation level almost exactly a year ago during the outbreak of President Trump's tariff wars.
K.K
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