Wall Street stocks pushed into record territory early Thursday on diminishing worries over the US-Iran clash, shrugging off weak results from some retailers.
All three major indices were around or above their all-time closing highs as investors became more confident the fight between Tehran and Washington after the US killed an Iranian commander won’t escalate significantly.
“We can’t help but think that market participants are trading one fear for another,” said Patrick O’Hare, an analyst at Briefing.com. “The fear of escalating military conflict between the US and Iran is effectively being traded for a fear of missing out on further gains in the stock market.”
About 30 minutes into trading, the Dow Jones Industrial Average stood at 28,867.94, up 0.4 percent.
The broad-based S&P 500 gained 0.5 percent to 3,267.72, while the tech-rich Nasdaq Composite Index jumped 0.8 percent to 9,197.81.
“The US and Iran are still at odds with each other, but as long as a conflict doesn’t seem to be on the horizon, the feel good factor is likely to last,” explained David Madden, an analyst at CMC Markets UK.
US President Donald Trump on Wednesday pulled back from the brink of war with Iran, saying Tehran appeared to be “standing down” after firing missiles — without causing casualties — at US troops based in Iraq.
The comments cooled what threatened to become an uncontrolled boiling over of tensions after Trump ordered the killing last Friday of a top Iranian general, Qassem Soleimani.
Oil prices, which spiked briefly to four-month highs on Wednesday soon after the Iranian attack, dropped back below their start point compared with overnight in New York on the softer tone from both sides.
The rush to riskier investments saw gold, seen as a haven in times of unrest, sink more than one percent, having broken $1,600 per ounce for the first time in seven years.
“Assuming Iran-US tensions continue to simmer rather than boil, markets are likely to refocus on the global growth outlook and on trade, with the interim US-China trade deal expected to be signed on 15 January,” said National Australia Bank’s Tapas Strickland.
The lowering of tensions will allow traders to turn their attention to the release Friday of US jobs data, which will provide the latest snapshot of the world’s number one economy, with recent figures indicating it remains robust.
Also in focus is the upcoming earnings season, which kicks off this month.
In London meanwhile, the pound slid around half-a-percent versus the dollar and euro after Bank of England governor Mark Carney said Britain’s economic recovery was “not assured” despite a drop in Brexit uncertainties.
“Although the risk of a semi-hard Brexit at the end of 2020 will continue to hang over the UK, the sweeping 12 December election win for (Prime Minister Boris) Johnson and his Conservative Party has brought much of the damaging uncertainty of recent years to an end,” said Kallum Pickering, senior economist with Berenberg as he forecast a real growth pickup from 1.3 percent in 2019 to 1.8 this year and 2.1 in 2021.