Stocks Rally as Iran Worries Ease and Corporate Outlook Brightens

Stocks climbed on Wednesday, with the Nasdaq composite hitting a record, after President Trump backed away from further confrontation with Iran. A handful of upbeat corporate updates also pointed to growing signs of economic strength.

The S&P 500 shot higher shortly after Mr. Trump concluded a speech from the White House on Wednesday morning, in which he said that Iranian missile strikes on American positions in Iraq had produced no American casualties and that Iran now “appears to be standing down.”

By the end of the day, the index was up 0.5 percent, at 3,253.05, just shy of a record. The tech-heavy Nasdaq composite rose 0.7 percent to reach its new high.

Oil prices, which had spiked after the missile attacks on Tuesday night, tumbled after the televised address.

The initial nervousness in financial markets had eased even before Mr. Trump’s statement, after Iran’s foreign minister suggested that the country was ready to stand down for now.

Brent crude, which had jumped about 5 percent to as high as $71.75 a barrel immediately after news of the Iranian missile attack Tuesday night, wound up dropping 4.1 percent to $65.44.

The decline in crude oil costs lifted fuel-reliant sectors of the American stock market: Airline stocks jumped, with Delta shares up 2.2 percent and American Airlines up 2.3 percent.

But the gains on Wednesday weren’t just a reaction to the pause in hostilities in the Middle East.

A number of companies reported better-than-expected results, signaling growing optimism about the health of the economy and the outlook for profits. That optimism will be crucial to keeping the decade-long bull market for stocks rolling in 2020.

Shares of the homebuilder Lennar rose 0.8 percent after it reported better-than-expected earnings and sales results before the open of trading on Wednesday.

On a conference call to discuss the results, Lennar executives told analysts that consumers continued to have confidence in the economy and in the job market. Low mortgage rates and unemployment near 50-year lows are also helping to support residential real estate.

Shares of Constellation Brands — the beer and wine company that owns the Corona and Modelo brands — jumped 3.6 percent after it beat Wall Street expectations for earnings and revenue in quarterly results, and raised its profit forecast for the year.

On Tuesday, Microchip Technology raised its sales forecast, and company executives suggested that they had seen a bottom in the demand for its devices in China, which was hit hard last year during the worst of the trade war between Washington and Beijing.

“There are signs everywhere that the demand is returning,” Steve Sanghi, Microchip’s chief executive, said at an investor conference on Tuesday.

The outlook for corporate profits will be a major focus for investors in the coming weeks, as the earnings reporting season unfolds.

The S&P 500 rose 28.9 percent in 2019 — one of the best annual performances in decades — with little in the way of profit growth. But that rally made stocks look overvalued according to key metrics like price-to-earnings ratios. Without profit growth to support last year’s gains, the market could falter, analysts say.

Other markets also suggested an improving outlook for growth. Prices for safe-haven investments like Treasury bonds and gold — markets where investors typically seek shelter during times of crisis — fell on Wednesday, reflecting an easing of worries tied to the situation in Iran.

The drop in prices for Treasury securities pushed bond yields — which move in the opposite direction — up sharply, which also suggests a rosier outlook for economic growth and inflation. The yield on the 10-year Treasury note climbed to 1.88 percent.

Higher yields also helped supercharge the share prices of financial firms, which tend to benefit from higher bond yields, as they serve as the basis for consumer lending rates.

The S&P 500 financial sector was one of the better performing parts of the American market on Wednesday, rising 0.5 percent.

But tech was the clear winner. Apple and Microsoft, whose enormous size gives them outsize sway over market-cap-weighted indexes such as the S&P 500, both rose 1.6 percent.

In global stock trading, Britain’s FTSE 100 was up slightly, while Germany’s DAX rose about 0.7 percent. In Asia, Hong Kong’s Hang Seng ended the day 0.8 percent lower, and Japan’s Nikkei fell 1.6 percent, well before Mr. Trump’s remarks.

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