Markets Mixed as Powell, Iran Tensions Drive Moves

US equity indexes were mixed midday and intraday on Monday as investors weighed Federal Reserve commentary against rising geopolitical tensions. Broad‑market exchange-traded funds showed a similar split, with the iShares Russell 2000 ETF (IWM) falling while the iShares Core S&P 500 ETF rose.

Trading reports described benchmark US equity gauges as neither uniformly higher nor lower, reflecting a cautious tone as markets assessed monetary policy signals and the potential economic impact of developments involving Iran.

Federal Reserve Chair Jerome Powell said inflation expectations remain well anchored and indicated the central bank will continue monitoring price developments. His remarks helped calm some inflation concerns that had been weighing on investors.

Following Powell’s comments, government bond yields slumped, signaling shifting expectations around the interest rate outlook. Market coverage linked the move in yields directly to his reassurance on inflation expectations.

Reports repeatedly highlighted Powell’s role in stabilizing sentiment, noting that his message on expectations contrasted with recent worries about accelerating prices in some parts of the global economy.

Former President Donald Trump warned Iran to reach a deal, with separate accounts saying he "ups the ante" against the country. These comments came as markets were already focused on the economic fallout of what reports referred to as the Iran war.

Oil prices moved higher as traders parsed both Trump’s remarks and Powell’s comments. Coverage described crude advancing as geopolitical risks around Iran remained elevated.

Gold traded higher for a second straight day Monday, regaining ground it had previously lost. Reports tied the metal’s advance to investor focus on the potential economic consequences of the conflict involving Iran.

Sector reports showed a divided US market. Technology stocks were lower Monday afternoon, with the State Street Technology Select Sector SPDR ETF (XLK) declining. Tech was cited as the sole decliner on the Toronto Stock Exchange, which was otherwise broadly higher at midday.

In contrast, financial stocks advanced, with the NYSE Financial Index adding ground in Monday afternoon trading. Separate updates confirmed that financials were among the sectors moving higher as the session progressed.

Health care shares rose, with the NYSE Health Care Index up about 0.6% and related exchange-traded products also higher. Consumer stocks likewise advanced, supported by gains in consumer staples-focused funds.

Energy stocks were described as mixed, with the NYSE Energy Sector Index posting modest gains in afternoon trading. The sector’s performance reflected support from firmer oil prices alongside divergent moves among individual names.

Outside the US, European stock markets tracked higher Monday, with the Stoxx Europe index gaining about 0.8%. Reports also noted a surge in German inflation, which formed part of the backdrop for the move higher in regional equities.

European companies traded in the US as American depositary receipts began the week higher in late Monday morning action, underscoring the generally positive tone toward European risk assets.

In Canada, the Toronto Stock Exchange was up 310 points at midday, with most sectors higher. Technology shares were again an exception, declining about 1% even as the broader Canadian market advanced.