[New York Stock Market] All Major Indices Rise on Hopes of Easing Middle East Tensions... International Oil Prices Fall

"Iran Expresses Willingness for Dialogue with Israel through Mediators"
Trump Also Confirms "Iran Wants Talks"
Oil Prices Fall Over 1% on Hopes for Easing Middle East Tensions
FOMC to Decide on Interest Rates on the 18th... 99% Expect No Change

All three major indices on the New York Stock Exchange rose on June 16 (local time). Stock prices rebounded on expectations that tensions in the Middle East would ease, following reports that Iran had expressed its willingness to engage in dialogue with Israel despite ongoing armed conflict. International oil prices also declined.

Reuters Yonhap News

On this day, the blue-chip Dow Jones Industrial Average closed at 42,515.09, up 317.3 points (0.75%) from the previous trading day. The large-cap S&P 500 rose by 56.14 points (0.94%) to finish at 6,033.11, while the tech-heavy Nasdaq climbed 294.39 points (1.52%) to close at 19,701.21.

The recent surge in international oil prices subsided. West Texas Intermediate (WTI) crude fell by $1.21 (1.66%) to $71.77 per barrel, while Brent crude, the global oil price benchmark, dropped by $1 (1.35%) to $73.23 per barrel.

On June 13, Israel struck Iran's nuclear facilities ahead of the sixth round of nuclear talks between Iran and the United States. In response, Iran immediately attacked major targets, including Tel Aviv, the Israeli capital, with missiles and drones. Both sides exchanged retaliatory airstrikes over the weekend, heightening concerns over instability in the Middle East. However, optimism that tensions may ease is spreading after reports emerged that Iran, through several countries including Saudi Arabia, requested U.S. President Donald Trump to pressure Israel for an immediate ceasefire. President Trump, attending the Group of Seven (G7) summit in Cananaskis, Alberta, Canada, told reporters, "They (Iran) want dialogue, but they should have done it earlier," confirming Iran's willingness to return to the negotiating table.

The Wall Street Journal (WSJ) also reported that Iran had conveyed its willingness to halt hostile acts against Israel and to discuss its nuclear program. Iran reportedly stated, through Arab mediators, that it could return to the negotiating table on the condition that the United States does not participate in Israel's attacks against Iran.

Krishna Guha, vice chairman of Evercore ISI, stated, "The market feels relief at the prospect that the conflict may continue as a limited war," and added, "We see this as possible, but our base scenario is that the conflict will persist for several weeks, which will impact the energy sector and keep the risk of U.S. intervention high."

Amid heightened instability in the Middle East on June 13, all three major indices fell by more than 1%. The Dow Jones declined by 1.3% for the week, while the S&P 500 and Nasdaq dropped by 0.4% and 0.6%, respectively. However, with expectations of easing tensions in the Middle East, oil prices fell and risk appetite increased, leading to a rebound in the stock market on this day.

Investors are also closely watching the Federal Reserve's Federal Open Market Committee (FOMC) regular meeting scheduled for June 17-18. According to CME FedWatch, the federal funds futures market on this day reflected a 99.8% probability that the Fed will keep the benchmark interest rate unchanged at the current 4.25-4.5% range on June 18. If the Middle East conflict causes oil prices to rise, the likelihood of a future Fed rate cut may decrease further.

By sector, large-cap technology stocks showed strong performance. Meta, the parent company of Facebook, jumped 2.9%. Nvidia rose 1.92%, while Apple and Microsoft (MS) gained 1% and 0.88%, respectively. Tesla advanced 1.17%, and Palantir surged 2.92%.

U.S. Treasury yields rose slightly. The yield on the 10-year Treasury, the global benchmark for bond yields, increased by 2 basis points (1bp = 0.01 percentage point) from the previous day to 4.45%, while the yield on the 2-year Treasury, which is sensitive to monetary policy, rose by 1 basis point to 3.96%.