US stocks reversed their decline on Tuesday to close slightly higher, after Pakistan asked US President Donald Trump to extend by two weeks his deadline for Iran to agree to a ceasefire deal.
The S&P 500 Index gained 0.1% while the Nasdaq 100 Index was little changed. Oil fell and the Cboe Volatility Index hovered near 26.
Equity markets remained tense amid developments in the Middle East. Trump's deadline for Iran to agree to a deal that includes freedom of navigation through the Strait of Hormuz is due later Tuesday, with outcomes ranging from a diplomatic breakthrough to potential military escalation. Meanwhile, Iran pressed on with attacks across the Persian Gulf.
On Tuesday afternoon, Pakistan Prime Minister Shehbaz Sharif posted on social media a plea for Trump to extend tonight's 8 p.m. Washington time deadline for two weeks.
"You have to ask what the markets do on a 'mission accomplished' headline, you also have to ask what they do on a '45-day ceasefire' headline, and you also have to ask what they do on a 'boots-on-the-ground' headline," Tony Pasquariello, partner and global head of hedge fund coverage at Goldman Sachs Group Inc., wrote in a note to clients Monday.
The conflict has already triggered the largest disruption to the global oil market on record, with crude prices surging and dated Brent - the world's most important price for real-world barrels - topping $140, signaling acute supply tightness.
"Even if tensions ease, normalization will trail, leaving upside risk to prices and potential product shortages," wrote Salih Yilmaz, Bloomberg Intelligence senior industry analyst.
ALSO READ: Iran And US Agree To Temporary Ceasefire As Donald Trump Calls Off Strikes
In March, the S&P 500 lost about 5% amid the ongoing war in Iran, prompting traders to cut positioning across equities. Systematic investors are now poised to flip back into equity-buying mode, according to Goldman Sachs Group Inc., as the wave of selling appears to be drying up.
From a technical perspective, the S&P 500 is approaching key chart resistance, namely the 200-day moving average. Decisively closing above this average can spur more buying, according to Anthony Feld, Bloomberg Intelligence senior technical strategist.
"If the 200-DMA is breached, the rally can extend to the bottom of the channel," Feld wrote in a note.
ALSO READ: Brent Crude Falls Over 5%, WTI Down 15% As Donald Trump Agrees To A Temporary Ceasefire With Iran
Fading sentiment among retail investors may be a sign that a near-term equity rebound is in the making, according to strategists at Citadel Securities. Individual traders - traditionally one of the stock market's most bullish cohorts - turned net sellers of US equities and options last week on Citadel Securities' platform, according to Scott Rubner, an occurrence seen just 18 times since January 2020. The shift follows weeks of volatility in stocks sparked by surging oil prices and the Iran war.
Equity bulls expecting a bumpy ride for US equities to be over soon have a historically favorable seasonal pattern on their side. April tends to be a strong month for stocks, with the S&P 500 Index sporting an average gain of 1.5% since 1990, trailing only November's 2.2% advance, data compiled by Bloomberg shows.
In corporate news, billionaire activist Bill Ackman proposed a bid for Universal Music Group NV, the world's largest music company, which houses the likes of Taylor Swift, Drake and Sabrina Carpenter, to increase returns on one of his hedge fund's biggest holdings. Shares of Universal Music gained nearly 12%.
Among other single stock movers, Broadcom Inc. shares rose 6.21% after the chipmaker announced a long-term agreement with Google to develop and supply Tensor Processing Units. A large fire at a Kimberly-Clark Corp. distribution center in Ontario, California, will add "uncertainty" and likely "disruptions" to the company's operations, according to Piper Sandler analyst Michael Lavery. The stock fell 4.06%
Looking ahead, traders are also awaiting key inflation reports as well as a reading on US consumer sentiment due later this week.
Sectors to Watch:
Shares of managed care companies gained after the Centers for Medicare and Medicaid Services finalized a 2.48% rate hike for health insurers in 2027. Investors see the pay boost as a meaningful improvement over the initial rates the agency proposed in January.
Energy stocks advanced about 0.8% as traders parsed conflicting messaging on the trajectory of the Middle East conflict.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
