Wall Street erases losses and ends higher, with NASDAQ marking over 1% profits

US stock indices rose during Monday’s trading, erasing the sharp losses recorded earlier in the session, as the war in the Middle East and the resulting surge in oil prices revived concerns about inflationary pressures.

Observers believe that the sharp rise in oil prices caused by the war in the Middle East between the United States and Iran is bringing back memories of the stagflation crisis that occurred in the 1970s.

Stagflation refers to a situation in which the US economy falls into contraction and noticeably slower growth while inflation continues to rise, a scenario considered among the worst possible outcomes for any economy.

Several Federal Reserve officials have also begun sounding the alarm about monetary policy and the difficult position facing the central bank amid rising energy-driven inflation.

However, US President Donald Trump poured water on the fire today in remarks to a CBS News correspondent, saying the war against Iran may be nearing its end.

He stated: “I think the war is largely complete.” He added: “They have no navy, no communications, and no air force.”

Following these comments, along with calls from the International Energy Agency to release emergency oil reserves to address the crisis, oil prices declined broadly below the $90 level after approaching $120 earlier in Monday’s trading.

By the close of the session, the Dow Jones Industrial Average rose 0.5% (239 points) to 47,741 points, recording a session high of 47,876 and a low of 46,615.

The broader S&P 500 index climbed 0.7% (56 points) to 6,796 points, reaching a high of 6,810 and a low of 6,636.

The Nasdaq index advanced 1.4% (308 points) to 22,696 points, with a session high of 22,741 and a low of 22,062.