US stocks are higher today, but it’s been a volatile month on Wall Street
By John Towfighi, CNN
New York (CNN) — Wall Street entered the month of March trading just below record highs. But the war with Iran has rocked markets, sending the Dow and Nasdaq into correction territory and putting the S&P 500 on track for its worst quarter since 2022.
Oil prices have surged this month, raising concerns about energy inflation, clouding the outlook for central banks and posing headwinds for stocks. It’s been a volatile month as traders have navigated headlines out of the Middle East and shifting forecasts for how the Federal Reserve might respond to concerns about inflation and economic growth.
Wall Street’s fear gauge, the VIX, soared this month to its highest level since April. The VIX surpassed 30 points, a threshold that signals significantly heightened volatility.
While it’s been a rocky few weeks, US stocks were higher Tuesday, putting markets on track to close out a rough month on a high note: The Dow rose 954 points, or 2.1%. by midday. The S&P 500 gained 2.39% and the tech-heavy Nasdaq Composite rose 3.16%.
Stocks rallied on hopes for more guidance on when the conflict might come to a close after the Wall Street Journal reported President Donald Trump discussed ending the war. Traders have been grappling with uncertainty about the duration of the war.
While stocks rallied, some investors are cautious about the outlook. Oil prices traded above $100 per barrel Tuesday while the Strait of Hormuz remains effectively shut. Brent crude, the global oil benchmark, is up almost 50% this month.
The Dow and S&P 500 are set for their worst month since September 2022. The Nasdaq is set for its worst month in a year.
“If the Strait of Hormuz remains closed…and thus oil prices remain extremely elevated…it’s going to be very tough for the stock market to form the bottom for this decline,” Matt Maley, chief market strategist at Miller Tabak + Co, said in a note.
CNN’s Fear and Greed Index traded in “extreme fear” and hit its lowest level since November.
Stocks were also buoyed by hopes that the Fed might resume cutting interest rates later this year. Markets have gyrated as traders try to discern the outlook for the Fed. Treasury yields fell as investors bought bonds, reversing course after surging higher this month.
The US dollar index fell slightly Tuesday. The dollar index is up 2.6% this month and on track for its best month since July, benefitting from safe haven demand.
“All eyes will remain on the price of oil and news out of the Middle East,” Jay Woods, chief market strategist at Freedom Capital Markets, said in a note. “As tensions ebb and flow from the region, so will the direction of the markets.”
This is a developing story and will be updated.
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