Dow Jones, Wall Street rally on hopes of Iran war ending but futures fall

Benchmark indices on Wall Street rallied on Wednesday, May 20, putting an end to days of sluggish moves on hopes that the Iran war will end soon, although nothing of substance has emerged from West Asia just yet.

The Dow Jones gained over 650 points, while the S&P 500 and Nasdaq gained 1.1% and 1.5% respectively. Both the tech-heavy indices put an end to their three-week losing streak. Futures though, are trading with losses this morning, ranging from 140 points on the Dow futures, to as much as 250 points on the Nasdaq futures.

What Led To The Rally

US indices rallied in mid-week trade after US President Donald Trump told reporters that talks with Iran are at their final stages and that a deal will be made. Trump said that if not, they may have "to do nasty things" but hoped that such a situation does not arise. Axios reported about a call between Trump and Israeli Prime Minister Benjamin Netanyahu, later quoting Trump saying Netanyahu will do whatever he tells him to.

Iran's semi-official Tasnim News Agency said that the country is reviewing the proposal sent by the US, while its Revolutionary Guards warned of a severe retaliation beyond just the region, in case of Iran getting attacked again.

After Trump's Remarks

Following Trump's remarks, Brent crude fell over 5.5%, while the US crude fell below the $100 a barrel mark. Bond yields eased by up to 10 basis points on the 10-year note, sparking a sharp upmove in the equity markets.

Bond yields are back at the 4.6% level on the 10-year note this morning, while WTI crude is trading near $99 a barrel for the June contract.

Futures this morning are also reacting to results from Nvidia,

which surpassed estimates but the stock traded lower in afterhours trading.

Fed Minutes: Key Takeaways

The market generally shrugged off minutes from Jerome Powell's last meeting as Fed Chair, which showed most members agreeing to the fact that the next central bank move may have to be a rate hike, in case inflation remains persistently higher as an aftermath of the Iran war and higher energy prices.

Later today, Walmart, the world's largest retailer, reports results before market open, along with Deere & Co.

Initial Jobless Claims and data from the Fed's manufacturing survey will also be released later in the day.