The market rebounded as oil prices cooled. Crude oil is lower today despite the continuing conflict in Iran. After insurance carriers pulled coverage of ships trying to move through the Strait of Hormuz, Trump offered government coverage and military escort through the Strait. Oil remains elevated at $74/bbl, but fears were that it could spiral much higher. Reports of higher crude oil and distillate inventories in the US, along with higher refining rates, also helped.
Economic data also calmed growth concerns. Today, the ADP nonfarm employment data came in above forecast with 63K job growth in February, although the January number was revised from 22K to 11K. ISM data reflect stronger non-manufacturing activity and orders. Car and truck sales grew, and home mortgage activity improved. These trends help reassure investors that the economy is still growing.
Interest rates continue to climb higher. The US 2-year is up 3bps, as is the 10-year. Both are higher for the week but lower for the month. The US dollar Index is lower on the day, but higher for the week and month.
On the commodity front, precious metals are modestly higher. Natural gas is down 5%, now down 12% in a month as the heating season comes to a close. Gasoline is up another 1%, now up over 30% in a month. The big winner on the day is crypto, with Bitcoin up 8.2% to $73.4K.
As the day moves on, stocks continue to rise. It’s yet another example of how geopolitical risks often present short-term buying opportunities. This could change if the Iran conflict heats up, but for now, the VIX has dropped nearly 4 points to 20.6, and the downtrend has been broken, and we are in a guarded uptrend.
