Stocks Pare Earlier Losses on Hormuz Report: Markets Wrap

(Bloomberg) — Stocks cut earlier losses following a report that Iran is drafting a protocol with Oman to monitor traffic through the Strait of Hormuz, even as oil prices held onto hefty gains.

The S&P 500 Index was down 0.3% after falling around 1.5% earlier in the session. The Nasdaq 100 was off 0.5%, also rebounding from a deep loss. West Texas Intermediate was up 12% at around $112 per barrel, after rising to nearly $114 earlier in the session.

Iran is drafting a protocol with Oman to monitor traffic through the strait, having effectively shut it down since the start of the war, state-run IRNA reported. That would require shippers to pay tolls to the Islamic Republic, Deputy Foreign Minister Kazem Gharibabadi said in an interview with Sputnik.

The passage is officially international waters and any attempt by Iran to assert control over traffic would be opposed by Western powers and Gulf Arab states.

“Equity markets seem to be looking past the risk of a higher embedded premium in oil and more focused on the Strait reopening,” said Adam Turnquist, chief technical strategist for LPL Financial. “With oil clearly in the driver’s seat of risk appetite, sustainability of the recovery in equity markets appears vulnerable.”

The two-year Treasury yield was little changed at 3.79%.

Stocks started off the session deep in the red after a speech from President Donald Trump did little to reassure investors that the war in the Middle East was nearing a swift resolution.

A positive close for stocks would run counter to a pattern of late-week selloffs that have hit the market ever since the war began, as nervous investors unwind positions that could be upended if weekend developments threaten to worsen the hit to the global economy.

“While assets gyrate on every new headline, until a clear agreement is achieved with a palatable plan for reopening the Strait, there’ll be downward pressure on economic growth and upward pressure on headline inflation,” said Max Gokhman, deputy CIO, Franklin Templeton Investment Solutions. “That spells indigestion for both equity and bond investors.”

Tesla Inc. shares fell after the company posted one of its worst sales quarters in years, missing Wall Street’s expectations, as it struggles to turn around its core business and navigate an increasingly challenged electric-vehicle market.

Ahead of Friday’s March payrolls report, jobs data on Thursday gave mixed signals on the labor market. A report from Challenger, Gray & Christmas Inc. showed a 25% increase in job-cut announcements in March from the previous month. Meanwhile, initial jobless claims unexpectedly fell in the week through March 28.

Corporate News:

A group of private credit firms led by Blackstone Inc. has refused to extend another lifeline to software company Medallia, amping up pressure on owner Thoma Bravo to inject more equity into the troubled business or hand over the keys via a debt restructuring. Stellantis NV is discussing options for building electric vehicles in Canada with its Chinese partner, Zhejiang Leapmotor Technology Co., according to people familiar with the matter. Alibaba Group Holding Ltd. has released its third proprietary AI model in as many days, reinforcing the company’s intent to focus on profiting off its flagship artificial intelligence services. Some of the main moves in markets:

Stocks

The S&P 500 fell 0.3% as of 1:48 p.m. New York time The Nasdaq 100 fell 0.5% The Dow Jones Industrial Average fell 0.5% The MSCI World Index fell 0.5% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.4% to $1.1541 The British pound fell 0.6% to $1.3225 The Japanese yen fell 0.5% to 159.58 per dollar Cryptocurrencies

Bitcoin fell 1.9% to $66,890.26 Ether fell 4.2% to $2,053.83 Bonds

The yield on 10-year Treasuries declined one basis point to 4.31% Germany’s 10-year yield was little changed at 2.99% Britain’s 10-year yield was little changed at 4.83% Commodities

West Texas Intermediate crude rose 12% to $111.80 a barrel Spot gold fell 2.3% to $4,651.45 an ounce This story was produced with the assistance of Bloomberg Automation.

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