US STOCKS-Wall Street advances as investors bet on Mideast de-escalation
By Sinéad Carew and Purvi Agarwal
March 25 (Reuters) - Wall Street's main indexes rose on Wednesday as oil prices dropped, with talks between the U.S. and Iran feeding investor hopes for a de-escalation in the fourth week of a war that has exacerbated inflation concerns.
Iran initially said it considered U.S. proposals delivered by Pakistan as excessive and demanded sovereignty over the Strait of Hormuz. On Wednesday, a senior Iranian official told Reuters that Tehran was still reviewing the proposal to end the war.
Global markets had drawn comfort from reports the U.S. was seeking a ceasefire, and hoped for restoration of shipping through the crucial strait.
"There is optimism that the proposal and counter-proposal are setting the stage for more negotiations," said Gene Goldman, chief investment officer at Cetera Investment Management.
Until there is clarity on when the war might end, Goldman said he expects "volatility to remain elevated given the impact of higher oil prices on inflation."
At 2:03 p.m., the Dow Jones Industrial Average .DJI rose 375.60 points, or 0.81%, to 46,499.66, the S&P 500 .SPX gained 49.12 points, or 0.75%, to 6,605.49 and the Nasdaq Composite .IXIC gained 210.18 points, or 0.97%, to 21,972.08.
Energy .SPNY fell slightly in sympathy with oil prices. The rest of the S&P 500's 11 major industry sectors were gaining ground. The biggest gainers were materials .SPLRCM, up nearly 2%, and consumer discretionary .SPLRCD, up more than 1.6%.
With oil prices down more than 2%, shares in companies that depend heavily on fuel were rallying. Cruise operators including Norwegian Cruise Line NCLH.N gained more than 3%. Airline stocks also rose, with the S&P Composite 1500 Passenger Airlines index .SPCOMAIR up 1.7%.
The small-cap Russell 2000 index .RUT was up 1.2% after hitting a two-week high.
U.S.-listed shares of Arm ARM.O jumped 18.6% after the company unveiled a new AI data center chip that is expected to bring billions of dollars in revenue. It was the biggest gainer in the Philadelphia Semiconductor Index .SOX, which added 1.6%. Other chipmakers also moved higher with Intel INTC.O up more than 7% while Nvidia NVDA.O rose 2%.
Destiny Tech100 DXYZ.N surged 14% after a report that SpaceX aims to file its IPO prospectus as soon as this week. SpaceX is the fund's largest equity holding.
Other space companies also rose, with Rocket Lab RKLB.O up 8% and Intuitive Machines LUNR.O adding almost 14%. EchoStar SATS.O shares added 8.8%.
The oil price spike has revived inflation worries, complicating the interest-rate outlook of central banks. Markets are no longer pricing in any easing from the Federal Reserve this year, according to CME Group's FedWatch Tool, compared with the two cuts that were expected before the war broke out.
Among other movers, U.S.-listed shares of JD.com JD.O rose 8% and Alibaba BABA.N rose 3.7%, after Chinese state media and the regulator urged the food-delivery platform industry to end a price war. Robinhood Markets HOOD.O added 5.3% after the trading platform announced a new $1.5 billion share buyback program.
Advancing issues outnumbered decliners by a 3.19-to-1 ratio on the NYSE, where there were 92 new highs and 106 new lows. On the Nasdaq, 3,171 stocks rose and 1,465 fell as advancing issues outnumbered decliners by a 2.16-to-1 ratio.
The S&P 500 posted 15 new 52-week highs and 23 new lows while the Nasdaq Composite recorded 58 new highs and 148 new lows.
