Stock Market Update

[BRIEFING.COM] Stocks are rallying today in response to commentary from President Trump that suggested a potential end to the war in Iran. President Trump said via Truth Social this morning that the U.S. and Iran have engaged in productive conversations around a "complete and total resolution of our hostilities in the Middle East," adding that the talks will continue, and he has instructed the Department of War to postpone any strikes on Iranian power plants and energy infrastructure.

Equity futures moved sharply higher while oil prices fell in response to the premarket commentary. Stocks have expanded their gains since the open, with the S&P 500 (+2.0%) and DJIA (+2.1%) reclaiming their 200-day moving averages, while the Nasdaq Composite (+2.0%) now sits less than 0.5% below its own 200-day moving average.

The small-cap Russell 2000 (+3.6%) and S&P Mid Cap 400 (+3.2%) are posting even wider gains. 

All eleven S&P 500 sectors trade higher, with eight sectors holding gains wider than 1.0%. Growth and cyclical sectors such as the consumer discretionary (+3.4%), industrials (+2.9%), and information technology (+2.4%) sectors outperform, while the defensive consumer staples (+0.8%) and health care (+0.8%) hold more modest gains. 

The energy sector (+0.3%) trades just modestly higher as crude oil retreats today, currently down $11.25 (-11.5%) to $86.98 per barrel.

Optimism around a potential end to the war in Iran has also had a positive effect on the market's rate cut expectations. The market is still not expecting a rate cut this year, though the probability of a rate hike has decreased today. On Friday, the CME FedWatch Tool assigned a 32% probability to a rate hike of at least 25 basis points at the October FOMC meeting. That figure is down to just under 10% today.