Dow jumps 631 pts amid Trump-Iran talks contradiction
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- Dow Jones rose 631.06 points (1.38%) to 46,208.53, with the S&P 500 gaining 80.10 (1.23%) to 6,586.77 and the Nasdaq adding 299.15 (1.38%) to 21,946.76, though all three indexes finished well off their session highs once Iran's denial surfaced.
- Trump announced the US and Iran held talks in the past day with "major points of agreement" and that a deal to settle the war could come soon, but Iran's Parliamentary Speaker Mohammad Baqer Qalibaf contradicted him on social media, saying no talks had been held.
- Oil prices settled down more than 10% on Monday, the primary catalyst for the equity rebound after stocks had fallen the prior week on threats of attacks on Israeli and Iranian power networks.
- Fed rate-hike odds for December were trimmed to roughly 12% from 25% the prior session, with traders now pricing a 70.8% chance rates are left unchanged by year-end after last week's hawkish inflation concerns.
- Russell 2000 outperformed large-cap indexes, recovering after entering correction territory Friday with a close more than 10% below its January 22 record close.
- Airlines (Alaska Air, American Airlines, United) and cruise operators (Norwegian, Carnival, Viking Holdings) jumped on the oil-price drop, while the S&P 500 Banking index posted its biggest daily gain since before the war.
- Synopsys rallied after activist investor Elliott Investment Management disclosed a multibillion-dollar position in the electronic design automation firm.
Why it matters: A 10%+ single-day oil swing — triggered by directly contradicted US-Iran claims — drove a 600+ point Dow rally, and the fact that equities closed well off intraday highs once Iran's denial surfaced shows how thin conviction is: per analyst Bob Doll, oil is now the only variable that matters for stock direction in the short term.
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