US stocks rise as fears ease over Mideast war
US stocks rise as fears ease over Mideast war
Traders work on the floor of the New York Stock Exchange. Photo: AFP
Wall Street stocks rose on Monday on hopes the Israel-Iran conflict will not spiral further, as markets began to look ahead to a Federal Reserve decision later in the week.
Iran's state broadcaster was briefly knocked off air by an Israeli strike after a barrage of Iranian missiles killed 11 people in Israel on the fourth day of an escalating air war.
But US stocks spent the entire session in positive territory as oil prices retreated in the absence of a direct hit to oil infrastructure, a sign analysts took as indicating that worse scenarios had not played out.
The Dow Jones Industrial Average finished up 0.8 percent at 42,515.
The broad-based S&P 500 climbed 0.9 percent to 6,033, while the tech-rich Nasdaq Composite Index jumped 1.5 percent to 19,701.
"The primary force today is just the sense that the conflict between Israel and Iran is relatively contained so far," said Briefing.com analyst Patrick O'Hare.
After decades of enmity and a prolonged shadow war, Israel on Friday launched a surprise aerial campaign against targets across Iran, saying they aimed to prevent its arch-foe from acquiring atomic weapons – a charge Tehran denies.
While the conflict brews on, there has been no direct hit on the Straits of Hormuz, a key shipping lane, analysts said.
"It hasn't really gotten worse than the bombing and it's not boiling over into other countries or other markets, like shipping," said Jack Ablin of Cresset Capital Management.
A majority of the S&P 500's 11 sectors advanced.
Semiconductor shares were among the strongest sectors, with AMD 8.7 percent winning, Nvidia 1.9 percent and Micron Technology 3.7 percent.
United States Steel jumped 5.1 percent in the first session since President Donald Trump signed an executive order approving a "partnership" between the Pittsburgh-based company and Nippon Steel, apparently clearing the way for a transaction partially revised from an original plan for the Japanese firm to acquire the old US company.
Besides the Middle East conflict, markets are watching for Wednesday's Fed decision and other US economic news, including May retail sales. (AFP)
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Late last week, Israel began a wave of attacks on Iran under the banner of Operation Rising Lion, with the stated goal of crippling the Islamic republic's nuclear program and long-range strike capabilities. At the outset, Israel claimed Iran would soon be able to build nine nuclear weapons, a situation Israel regarded as completely unacceptable. Following Israeli strikes against Iranian nuclear facilities, and targeted assassinations of Iranian nuclear scientists and key members of the Iranian armed forces, Iran retaliated with a large barrage of ballistic missiles and drones against Tel Aviv and Jerusalem. The first wave consisted of some 200 ballistic missiles and 200 drones. The conflict continues to escalate, with population centers increasingly being targeted. Israel's missile defense systems (including the vaunted Iron Dome) have so far staved off most of Iran's attacks, but the future is uncertain. Iran possesses a large arsenal of ballistic missiles and long-range drones, alongside other long-range weapons such as cruise missiles. Ballistic missiles travel on a largely fixed path steered by gravity, while cruise missiles can adjust their course as they fly. Iran is approximately 1,000 kilometers from Israel, so the current strikes mostly involve what are classified as medium-range ballistic missiles, alongside long-range drones. It is not clear exactly what type of missile Iran has used in its latest strikes, but the country has several, including the Fattah-1 and Emad. It is very difficult to defend against ballistic missiles. There is not much time between launch and impact, and they come down at very high speeds. The longer the missile's range, the faster and higher it flies. An incoming missile presents a small, fast-moving target – and defenders may have little time to react. Israel possesses arguably one of the most effective, battle-tested air defence systems in service today. The system is often described in the media as the 'Iron Dome', but this is not quite correct. Israel's defences have several layers, each designed to address threats coming from different ranges. Iron Dome is just one of these layers: a short-range, anti-artillery defence system, designed to intercept short-range artillery shells and rockets. In essence, Iron Dome consists of a network of radar emitters, command and control facilities, and the interceptors (special surface-to-air missiles). The radar quickly detects incoming threats, the command and control elements decide which are most pressing, and the interceptors are sent to destroy the incoming shells or rockets. The other layers of Israel's defence system include David's Sling, and the Arrow 2 and Arrow 3 interceptors. These are specifically designed to engage longer-range ballistic missiles, both within the atmosphere and at very high altitudes above it (known as exoatmospheric interception). Spectacular footage has been captured of what are likely exoatmospheric interceptions taking place during this latest conflict, demonstrating Israel's capacity to engage longer-range missiles. The US military has comparable missile defence systems. The US Army has the Patriot PAC-3 (comparable to David's Sling) and THAAD (comparable to Arrow 2), while the US Navy has the Aegis and the SM-3 (comparable to Arrow 3) and the SM-6 (comparable again to Arrow 2). The US deployed Aegis-equipped warships to support Israel's defence against missile attacks in 2024, and appears to be preparing to do the same now. Iran possesses some air defense systems such as the Russian S300, which has some (very limited) ballistic missile defence capabilities, but only against shorter-range (and thus slower) ballistic missiles. Further, Israel has been focusing on degrading Iran's air defenses, so it is not clear how many are still operational. Iran has been focusing on developing technology such as maneuverable warheads, which are harder to defend against. However, it is not clear whether these are yet operational and in Iranian service. A THAAD interceptor launched during a US Army test in 2013. Photo: The U.S. Army Ralph Scott/Missile Defense Agency / US Department of Defense / Wikimedia Commons Missile defenses are finite. The defender is always limited by the number of interceptors it possesses. The attacker is also limited by the number of missiles it possesses. However, the defender must often assign multiple interceptors to each attacking missile, in case the first misses or otherwise fails. The attacker will plan for some losses to interceptors (or mechanical failures) and send what it determines to be enough missiles for at least some to penetrate the defenses. When it comes to ballistic missiles, the advantage lies with the attacker. Ballistic missiles can carry large explosive payloads (or even nuclear warheads), so even a handful of missiles 'leaking' past defensive systems can still wreak significant damage. Israel's missile defenses are unlikely to stop working completely. However, as attacks deplete its stocks of interceptors, the system may become less effective. As the conflict continues, it may become a race to see who runs out of weapons first. Will it be Iran's stocks of ballistic missiles and drones, or the interceptors and anti-air munitions of Israel, the US and any other supporters? It is impossible to say who would prevail in such a race of stockpile attrition. Some reports suggest Iran has fired approximately 1,000 ballistic missiles of an estimated 3,000. However, this still leaves it with an enormous stockpile to use, and it is unclear how fast Iran can make new missiles to replenish its resources. But we should hope it doesn't come to that. Beyond the tit-for-tat exchange of missiles, the latest conflict between Israel and Iran risks escalating. If it is not resolved soon, and if the US is drawn into the conflict more directly, we may see broader conflict in the Middle East. James Dwyer is lecturer, School of Social Sciences, University of Tasmania This article is republished from The Conversation under a Creative Commons license. Read the original article.
