US markets wrap: Trump rules out pre-midterm Iran strike

Market performance update:

• S&P 500 declined 0.5%
• WTI crude oil climbed $2.82 to $91.09
• Gold advanced $23 to $4133
• US 10-year Treasury yields fell 5 basis points to 5.22%
• The Canadian dollar outperformed while the US dollar lagged

Equity markets opened on a negative note after crude oil surged in Europe on the back of reports and remarks from Trump about a potential attack on Iran once again. Trump later published a message stating he would not strike Iran prior to the midterm elections, prompting a rebound in oil prices. Market participants reacted with typical doubt, yet the episode underscored the broad headwind that elevated oil and inflation pose for Republicans, and signaled Trump's eventual desire to end the conflict.

A separate report revealed that OpenAI's annualized revenue run rate stands at $50 billion, below the $70 billion figure that analysts had expected. This news weighed on shares of semiconductor firms and power generation companies. Additionally, the report triggered some selling of the US dollar, serving as a reminder that artificial intelligence-related capital flows have significantly contributed to the US dollar's outperformance this year.

Economic releases were sparse, but weekly initial jobless claims stayed close to historically low levels. Federal Reserve officials kept up their rhetoric on the need to lower inflation, pointing to the probability of an interest rate increase this year and additional tightening thereafter.

In closing, Treasury yields reversed course during the session, ending at their lowest levels of the day. Some wondered whether this marked another instance of The Economist signaling a market peak.