U.S. equities finished little changed on Tuesday as the energy markets were roiled by President Donald Trump’s decision to exit the Iran nuclear deal. But an intense flow of conflicting headlines before the announcement resulted in serious volatility in the crude oil market, as trading algorithms whipsawed on a series of flashing headlines.
In the end, the Dow Jones Industrial Average gained a fraction, the S&P 500 lost a fraction, the Nasdaq Composite gained a fraction, and the Russell 2000 gained 0.5%.
The exact outcome of the exit remains to be seen. Will additional sanctions be put in place? Will Iranian oil have a harder time coming to market? There is some breathing room, with the U.S. Treasury announcing “wind down” periods of 90-days and 180-days before sanctions and other measures take effect.
This is likely another Trumpian negotiating tactic designed to get the mullahs back to the table. For now, Tehran is trying to isolate Trump, saying they will continue to honor the agreement with the European co-signers.
According to Credit Suisse, the last time Iran was subject to international sanctions (between 2010 and 2016), oil exports fell from 2.2 million barrels per day to around 1.1 million barrels. Since the “Iran deal” came into effect, Iranian output increased from 2.7 million to 3.8 million barrels per day.
Overall, crude oil fell 2.3% to close at $69.08 per barrel. Energy stocks led the way at the sector level, however, adding 0.8%. Financial and industrial stocks followed, rising 0.7%. Citigroup Inc (NYSE:C) gained 3.7% following news ValueAct has built a $1.2 billion stake in the company.
Seven sectors finished in the red, with utilities and telecom leading the way down with losses of 2.5% and 1.3% respectively. Comcast Corporation (NASDAQ:CMCSA) lost 5.6% following reports it’s planning a cash bid for the entertainment assets of Twenty-First Century Fox Inc (NASDAQ:FOXA) in an attempt to head off Walt Disney Co (NYSE:DIS).
And finally, on the economic front, the March Job Openings and Labor Turnover Survey showed job openings increased to 6.55 million from 6.07 million to hit a record high.
Check out Serge Berger’s Trade of the Day for May 9.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
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