This is why the Dow jumped 161 points on Wednesday while oil prices fell
Stocks rallied and oil sank Wednesday as President Donald Trump said Iran appeared to be “standing down” after firing a series of missiles at U.S. forces stationed in Iraq Tuesday evening.
Investors braced for heightened tensions in the oil-rich Middle East after a U.S. air strike killed a top Iranian general in Iraq last week. Iran’s apparent retaliation initially sent global stock markets sharply lower overnight, but the moves stabilized as investors reassessed the possibilities of a broader conflict. Crude prices retreated.
No deaths or injuries were reported after Iran's missile strike. The president threatened Iran with additional sanctions Wednesday but signaled the U.S. doesn't seek a war with Tehran.
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Signs of easing tensions between the two countries on Wednesday helped boost investor sentiment, analysts say.
"The market has confidence in Trump's ability to navigate through these waters and avoid military conflict," says Nick Giacoumakis, president and founder of New England Investment & Retirement Group.
The Dow Jones industrial average jumped 161.41 points, or 0.6%, to close at 28,745.09. The index retraced losses after futures tumbled more than 400 points late Tuesday. The Standard & Poor’s 500 climbed 0.5% to end at 3,253.05. The Nasdaq Composite added 0.7% to 9,129.24 to finish at a record.
Upbeat labor market data helped calm investors' nerves about slowing economic growth ahead of Friday's jobs report. Private sector companies added 202,000 positions in December, according to ADP's monthly employment report on Wednesday. That beat analysts' estimates.
Stocks rose broadly as gains in financial and technology companies offset losses in the energy sector.
Banks led the charge, with JPMorgan Chase and Bank of America rising rough1%. The yield on the 10-year Treasury rose to 1.87% from 1.82% late Tuesday. Higher yields allow financial firms to charge more lucrative interest on loans.
Shares of Dow component Boeing dropped 1.7% after a Ukrainian airplane crashed Wednesday shortly after takeoff from Tehran, killing all 176 people aboard.
Energy stocks slid as oil prices fell. Diamondback Energy, Phillips 66 and ConocoPhillips dropped 3.2%, 3.7% and 2.3%, respectively. Benchmark U.S. crude fell $3.09, or 4.9%, to settle at $59.61. Brent crude, the international standard, lost $2.95, or 4.4%, to $65.36 per barrel.
Markets in Europe rebounded, with London's FTSE 100 rising less than 0.1% following early losses. Japan's Nikkei 225 dropped about 2% before recovering some of its losses. Stock markets in Hong Kong and Shanghai also fell.
This article originally appeared on USA TODAY: Dow jumps 161 points as Trump says Iran appears to be 'standing down' after missile strike
