US STOCKS-S&P 500, Nasdaq ease as investors weigh Middle East conflict outlook
By Caroline Valetkevitch and Purvi Agarwal
March 30 (Reuters) - The S&P 500 and Nasdaq edged lower Monday afternoon as optimism from President Donald Trump's comments on U.S.-Iran talks was offset by the president's new warnings to Tehran and a widening of the Middle East war.
Trump said the U.S. was in serious discussions with a "more reasonable regime" to end the war, but repeated his warning to open the Strait of Hormuz or risk U.S. attacks on Iranian oil wells and power plants. Iran described U.S. peace proposals as unrealistic.
Investors have been focused on how oil prices will impact the global economy after they shot up since the start of the war.
"The administration continues to send mixed messages," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
"When the messages seem good, to the extent they are believed, it helps the market. If something they say implies a more aggressive approach, the market sells off."
Escalating the conflict, Yemen's Iran-backed Houthi militia entered the war over the weekend.
All three of the major indexes started the day higher after logging sharp declines in the previous session. Since the war started, the Dow, the Nasdaq and the small-cap Russell 2000 .RUT have all confirmed correction territory, ending 10% lower from their record-high closes.
The Dow Jones Industrial Average .DJI rose 116.06 points, or 0.26%, to 45,282.70, the S&P 500 .SPX lost 20.74 points, or 0.32%, to 6,348.11 and the Nasdaq Composite .IXIC lost 149.69 points, or 0.71%, to 20,798.67.
Comments from Federal Reserve Chair Jerome Powell gave some support to stocks. Powell said longer-term inflation expectations appear to be holding despite the current energy shock, and the Fed does not yet need to make a decision on how to react to the latest troubles. U.S. crude oil settled higher, while Brent eased.
Money market participants have priced out any easing from the Federal Reserve this year, compared with two cuts expected before the war began, per the CME Group's FedWatch Tool.
The S&P 500 energy index .SPNY was down slightly and technology stocks .SPLRCT were also lower.
On the flip side, the financial index .SPSY gained after the U.S. Department of Labor issued long-awaited guidelines intended to clarify how trustees can add alternative assets to 401(k) retirement plans.
Shares of asset managers climbed with Blackstone BX.N up 3.4% and KKR KKR.N up 2.4%.
Advancing issues outnumbered decliners by a 1.11-to-1 ratio on the NYSE. There were 143 new highs and 260 new lows on the NYSE.
On the Nasdaq, 2,088 stocks rose and 2,591 fell as declining issues outnumbered advancers by a 1.24-to-1 ratio.
