Wall Street rises, oil dives amid renewed Middle East jitters

U.S. stocks ended higher, oil futures fell by more than four percent on comments by U.S. President Donald Trump and paring gains on reports of blasts in Baghdad.

Both the S&P 500 and Nasdaq hit record intraday highs, but major indexes cut their gains late in the day following reports of two blasts heard in Baghdad. After the bell, Iraq's military said two rockets had fallen inside Baghdad's Green Zone but there were no casualties.

Trump spoke at a White House briefing after Iran's missile strikes overnight on military bases housing U.S. troops in Iraq. The U.S. president said the strikes had not harmed any Americans and that Tehran appeared to be standing down.

"The measured tones coming out of the Trump administration potentially dialing back from a tit-for-tat reaction on balance is positive, but the market is going to react to minute-by-minute news of increased tensions in the Middle East," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

The Nasdaq registered a record high close and most S&P 500 sectors rose, while the S&P 500 energy index fell by 1.7 percent as oil prices slumped.

Global markets have been rattled by concerns about rising tensions in the Middle East after the U.S. killing of influential Iranian Major General Qasem Soleimani on January 3.

The Dow Jones Industrial Average rose by 161.41 points, or 0.56 percent, to 28,745.09, the S&P 500 gained 15.87 points, or 0.49 percent, to 3,253.05, and the Nasdaq Composite added 60.66 points, or 0.67 percent, to 9,129.24.

The S&P 500 posted 6258 new 52-week highs and no new lows; the Nasdaq Composite recorded 118106 new highs and 149 new lows.

Oil falls as worries ease

Oil prices fell as it became evident the rocket attack did not damage oil facilities or harm any Americans, with more pressure coming from a surprise build in U.S. crude stockpiles.

Before Trump's address, prices were already retreating from overnight highs after tweets by the U.S. president and Iran's foreign minister signaled at least temporary calm.

Brent futures fell by 2.83 U.S. dollars, or 4.2 percent, to settle at 65.44 U.S. dollars a barrel, their lowest close since December 16. In early trade, the contract hit its highest since mid-September at 71.75 U.S. dollars.

The global benchmark had been trending higher since hitting an October low of 56.15 U.S. dollars per barrel; the session high on Wednesday was 28 percent above that level.

U.S. West Texas Intermediate (WTI) crude fell by 3.09 U.S. dollars, or 4.9 percent, to settle at 59.61 U.S. dollars per barrel, its lowest close since December 12. The session high of 65.65 U.S. dollars was the highest since late April.

"Volatility to the extreme might best describe today's price action as the crude benchmarks sold off... roughly 9 percent from the overnight highs," Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.

The spreads between the session high and low were the widest for WTI since November 2014 and Brent since September 2019.

Source(s): Reuters