U.S. and Canadian stocks surged to their best day since last spring, and the Dow Jones Industrial Average soared 1,125 points on Tuesday as doubt swung back to hope about a possible end to the war with Iran.
The S&P 500 leaped 2.9% for its largest gain since May. Just a day before, worries about the war had sent the main measure of Wall Street’s health more than 9% below its all-time high set early this year.
The Dow Jones Industrial Average rallied 2.5%, while the Nasdaq composite jumped 3.8%.
Canada’s main stock index rallied by the most since April. But the index still posted its biggest monthly decline in nearly three years. The Toronto Stock Exchange’s S&P/TSX Composite Index ended up 833.10 points, or 2.6%, at 32,768.04, notching its highest closing level since March 17.
The rebound came as financial markets seized on a couple tenuous signals for hope about a possible end to the war. It’s the latest manic swing following weeks of frenetic back and forth amid uncertainty about the war. The moves also came as Wall Street marked the end of the year’s first quarter, a milestone that can cause a flurry of trading as fund managers close their books.
Analysts said optimism entered markets overnight following a report from The Wall Street Journal saying President Donald Trump told aides he’s willing to end the U.S. military campaign against Iran even if the Strait of Hormuz remains largely closed. The strait is a narrow waterway connecting the Persian Gulf to the open ocean, and a fifth of the world’s oil sails through it on a typical day.
Oil prices then took a sudden and sharp turn lower in midday trading following a news report from the Middle East quoting Iran’s president Masoud Pezeshkian as saying it has “the necessary will to end the war” as long as certain requirements are met, including “guarantees to prevent a recurrence of aggression.”
The worry on Wall Street has been that the war may last a long time and keep oil and natural gas from the Persian Gulf out of global markets, which could create a brutal blast of inflation.
Following Tuesday’s possible signals of hope, the price for a barrel of Brent crude oil, the international standard, eased 3.2% to settle at US$103.97. Benchmark U.S. crude erased a gain from the morning and fell 1.5% to settle at US$101.38.
Oil prices could quickly revert to spiking, to be sure, and stocks could get back to falling if tankers carrying crude can’t get through the strait easily. Iran attacked a fully loaded Kuwaiti oil tanker in the Persian Gulf in the latest fighting in the region.
And oil prices have already shot high enough that inflation in Europe accelerated to 2.5% in March, up from February’s 1.9%.
Stocks of companies that have big fuel bills rallied sharply. United Airlines soared 8.1%, and Norwegian Cruise Line Holding steamed 5.9% higher to trim their losses for the year so far.
Tech stocks were the strongest forces lifting the U.S. market in a widespread rally where four out of every five stocks within the S&P 500 rose. Marvell Technology shot up 12.8% after Nvidia invested $2 billion in the company and announced a partnership with it. Nvidia rose 5.6% and was the single strongest force lifting the S&P 500.
Centessa Pharmaceuticals soared 44% after Eli Lilly said it was buying the company working on treatments for excessive daytime sleepiness and other neurological conditions. Lilly, which is paying up to $7.8 billion if certain conditions are met, rose 3.7%
They helped offset a 6.1% drop for McCormick. The spice company is buying most of Unilever’s food business, including such brands as Hellmann’s, for cash and stock valuing it at $44.8 billion.
All told, the S&P 500 jumped 184.80 points to 6,528.52. The Dow Jones Industrial Average climbed 1,125.37 to 46,341.51, and the Nasdaq composite rallied 795.99 to 21,590.63.
They benefited from easing pressure from the bond market, where Treasury yields sank again. The yield on the 10-year Treasury fell to 4.31% from 4.35% late Monday and from 4.44% at the end of last week. The yield on the 10-year Treasury was at just 3.97% in late February, before worries about high oil prices pushed traders to erase bets for cuts to interest rates by the Federal Reserve this year.
Yields remained lower following a couple reports Tuesday on the U.S. economy that came in better than economists expected. One said confidence among U.S. consumers unexpectedly improved. The other said U.S. employers were advertising more job openings at the end of February than expected, though fewer than the month before.
For March, the Canadian index was down 4.6%, which was its biggest monthly decline since May 2023. Still, it was up 3.3% in the first quarter, marking the seventh straight quarterly advance.
“We had very deep oversold conditions within (growth-oriented) parts of the market – tied to financials, consumer discretionary as well as industrials – that are now showing a reasonable bounce,” said Sid Mokhtari, chief market technician for CIBC Capital Markets. “We’re still unsure whether or not this bounce can sustain itself going forward, but it is healthy to see at least some recovery.”
Domestic data was upbeat. It showed that GDP rose by 0.1% in January on a monthly basis, eclipsing estimates for a flat reading. An advance estimate showed the economy expanding by a further 0.2% in February.
The TSX materials group, which includes metal mining shares, jumped 6.1% as gold and copper prices climbed.
Technology in Toronto added 4.8% and heavily weighted financials ended 2.5% higher.
Suncor Energy said the majority of its bitumen output by 2040 will be produced using steam-assisted extraction technology. Its shares ended 0.1% higher. Still, energy was the only one of ten major sectors to lose ground, falling 0.6%.
The Associated Press, Reuters, Globe staff
