Wednesday's Stock Market Close: US Equities Jump, Oil Plunges After Trump’s Speech On Iran Missile Attacks

U.S. stocks surged Wednesday, with the S&P 500 touching an all-time high, and oil prices plunged on President Donald Trump signaled no military action in the wake of an Iranian missile strike on U.S. forces in Iraq calmed investors’ nerves.

The Dow Jones Industrial Average rose 161.85 points to 28,745.53 while the S&P 500 gained 15.89 points to 3,253.07 and the Nasdaq Composite Index climbed 60.66 points to 9,129.24.

Crude oil futures plunged 3.84% to $60.29 per barrel and Brent crude fell 2.21% at $66.06. Gold futures slipped 0.74%.

Volume on the New York Stock Exchange totaled 2.95 billion shares with 1,814 issues advancing, 210 setting new highs, and 1,144 declining, with 11 setting new lows.

Active movers were led by NIO Inc. (NIO), Advanced Micro Devices (AMD) and New York Mortgage Trust (NYMT).

Trump said on Wednesday Iran “appears to be standing down” after its missile launches, but assured that the U.S. will “immediately impose additional punishing economic sanctions on the Iranian regime.”

Trump also said there were no American casualties from the missile attack, and warned Iran against pursuing nuclear weapons.

“As long as I am president of the United States, Iran will never be allowed to have a nuclear weapon,” Trump said.

Iran fired ballistic missiles at two air bases in Iraq – in Al Asad and in Irbil -- housing U.S. troops in retaliation for the killing of Gen. Qassem Soleimani. Iranian Foreign Minister Mohammad Javad Zarif said the attack was an act of self-defense and not the prelude to war.

“We do not seek escalation or war, but will defend ourselves against any aggression,” Zarif tweeted.

“Now, as the president has to some degree defused some of the anxiety, so you’re getting a little bit of a sigh of relief rally here,” Art Cashin, director of floor operations at the NYSE for UBS, told CNBC.”

“The main market driver right now is the generally improving macroeconomic backdrop and most other things are a distraction from that overriding theme,” Michael Reynolds, investment strategy officer at Glenmede. “I think the loudest distraction has certainly been the geopolitical tension between the U.S. and Iran going back and forth.”

“While tensions between the U.S. and Iran are likely to continue, our base case does not assume significant and serious escalation as both sides do not have an interest to pursue a broader military conflict,” wrote Mark Haefele, global chief investment officer at UBS Wealth Management, overnight.

Boeing (BA) shares dropped 1.7% after a Boeing 737 airliner belonging to Ukraine International Airlines crashed after takeoff from Tehran on Wednesday, killing all 176 people aboard.

In economic data, total mortgage application volume fell by 1.5% for the last two weeks of 2019, the Mortgage Bankers Association said.

“Mortgage rates dropped last week as investors sought safety in U.S. Treasury securities as a result of the events in the Middle East, with the 30-year fixed mortgage rate declining to its lowest level since early October,” said Mike Fratantoni, the association’s chief economist.

Private sector employment increased by 202,000 in December, well above expectations, the ADP National Employment Report indicated.

Overnight in Asia, markets closed broadly lower. China’s Shanghai Composite dropped 1.22% while Hong Kong’s Hang Seng fell 0.83%, and Japan’s Nikkei-225 plunged 1.57%.

In Europe markets finished higher, with Britain’s FTSE-100 edging up 0.01%, France’s CAC-40 rising 0.31% and Germany’s DAX gaining 0.71%.

The euro dropped 0.39% at $1.111 while the pound sterling slipped 0.18% at $1.3098.

The yield on the 10-year Treasury rose 2.57% to 1.874% while yield on the 30-year Treasury gained 2.3% to 2.358%.