Dow closes up 600 points as Trump claims talks held with Iran
Photo taken on Aug. 12, 2024 shows the trading floor of the New York Stock Exchange NYSE in New York, the United States. (Liu Yanan/Xinhua via Getty Images)
(NEW YORK) — The Dow Jones Industrial average closed up more than 600 points on Monday after President Donald Trump claimed “productive conversations” had been held between the United States and Iran.
The major stock indexes each soared more than 2% in early trading but gave up some of those gains as a flurry of headlines about the U.S.-Israeli war with Iran elicited price fluctuations.
The peace talks — which Iranian officials denied — sent the price of oil plunging on Monday on hopes that negotiations could reopen the Strait of Hormuz and end a weeks-long global energy shock.
The Dow closed up 631 points or 1.3%, while the S&P 500 jumped 1.1%. The tech-heavy Nasdaq increased 1.3%.
Each of the indexes remained below where it stood before the U.S.-Israeli war with Iran began on Feb. 28.
A selloff cascaded across global markets in recent weeks as stockholders feared economic fallout from a potentially prolonged bout of elevated oil prices.
Global oil prices plunged more than 10% on Monday after Trump made his claim about ongoing negotiations with Iran. Still, the price of oil stood above $100 a barrel, marking a steep rise since the outbreak of war.
Trump, after postponing U.S. strikes on Iran’s energy infrastructure citing new negotiations with Tehran, said on Monday that talks will continue and that there are “major points of agreement.”
According to Iranian state media, Iran’s Parliament Speaker Mohammad Qalibaf said, “no talks with the U.S. have taken place; reports claiming otherwise are fake news aimed at influencing financial and oil markets and distracting from the challenges facing the U.S. and Israel.”
A television station broadcasts the Federal Reserve’s decision to hold rates after a Federal Open Market Committee meeting on the floor of the New York Stock Exchange. (Michael Nagle/Bloomberg via Getty Images)
(NEW YORK) — The Federal Reserve held interest rates steady on Wednesday at its first meeting since the U.S.-Israeli war with Iran drove up gasoline prices and risked a wider bout of inflation.
The central bank’s move marked the second consecutive time it has opted to maintain interest rates at current levels since the outset of 2026. Before that, the Fed cut interest rates a quarter-point three straight times. The decision on Wednesday matched market expectations.
“The implications of developments in the Middle East for the U.S. economy are uncertain,” the Federal Open Market Committee (FOMC), a policymaking body at the Fed, said in a statement on Wednesday.
Elevated price increases have coincided with a slowdown of economic growth, threatening to intensify an economic double-whammy known as “stagflation,” which poses difficulty for the Fed.
If the Fed opts to lower borrowing costs, it could spur growth but risk higher inflation. On the other hand, the choice to raise interest rates may slow price increases but raises the likelihood of a cooldown in economic performance.
The benchmark rate stands at a level between 3.5% and 3.75%. That figure marks a significant drop from a recent peak attained in 2023, but borrowing costs remain well above a 0% rate established at the outset of the COVID-19 pandemic.
A lackluster jobs report last week showed the U.S. economy lost 92,000 jobs in February, which marked a reversal of fortunes for the labor market and erased most of the job gains recorded in 2026.
The unemployment rate ticked up from 4.3% in January to 4.4% in February, the BLS said. Unemployment remains low by historical standards.
A revised government report last week on gross domestic product (GDP) showed the economy grew at a sluggish annualized pace of 0.7% over the final three months of 2025.
Those economic headwinds helped set the conditions before the outbreak of war with Iran, which spiked oil prices and risked price increases for a host of diesel-fuel transported goods.
U.S. crude oil prices rose to about $97 per barrel on Wednesday, marking a surge of more than 50% since a month earlier.
Since the military conflict began, U.S. gas prices have gone up 86 cents to an average of $3.84 per gallon as of Wednesday, according to AAA.
The rate decision on Wednesday marked the first such move since a federal judge blocked Justice Department subpoenas to the Federal Reserve’s Board of Governors after determining the government “produced essentially zero evidence” to support a criminal investigation of Fed Chair Jerome Powell, according to an unsealed court opinion.
“A mountain of evidence suggests that the Government served these subpoenas on the Board to pressure its Chair into voting for lower interest rates or resigning,” U.S. District Judge James Boasberg said in his opinion on Friday.
Acting U.S. Attorney Jeanine Pirro blasted Boasberg as an “activist” judge and pledged to appeal his ruling.
ABC News’ Alexander Mallin, Allison Pecorin, and Jack Date contributed to this report.
(NEW YORK) — A thaw in the housing market may deliver relief for homebuyers left out in the cold over recent years, analysts told ABC News.
After the pandemic, a rapid rise in home prices coincided with stubbornly high mortgage rates, shutting out potential buyers.
Glimmers of hope have started to emerge, however. Mortgage rates are falling, wages are rising faster than home prices and homebuyers are scooping up their biggest discounts in years, some analysts told ABC News.
“Housing is becoming more affordable. Are we there yet? No. But we’re on the right path,” Ken Johnson, a real estate economist at the University of Mississippi, told ABC News.
The average interest rate on a 30-year fixed mortgage stands at 6.09%, Freddie Mac data last week showed. A little more than a year ago, the average 30-year fixed mortgage rate exceeded 7%.
Each percentage point decrease in a mortgage rate can save thousands or tens of thousands in additional costs each year, depending on the price of the house, according to Rocket Mortgage.
“It looks like mortgage rates are settling down,” Lawrence Yun, chief economist at the National Association of Realtors (NAR), told ABC News. “That’s great news for homebuyers.”
A measure of housing affordability issued by NAR has improved for seven consecutive months, rising to its highest level since 2022, Yun said. The surge in home prices has slowed while income gains have accelerated, bolstering the purchasing power of homebuyers, some analysts noted.
“Incomes are growing faster than home prices,” Johnson said.
Despite these positive signals, the housing market still faces significant challenges, some analysts said, pointing to a fundamental shortage of housing supply.
The housing market is suffering from a phenomenon known as the “lock-in” effect, Lu Liu, a professor at the Wharton School at the University of Pennsylvania, told ABC News.
While mortgage rates have fallen, they remain well above the rates enjoyed by most current homeowners, who may be reluctant to put their homes on the market and risk a much higher rate on their next mortgage.
“The degree of lock-in is unprecedented in the U.S.,” Liu said, noting the prevalence of 30-year mortgages and the inability for homeowners to transfer a current loan to a new property.
Existing home sales declined by 8.4% in January from the previous month, the NAR said in a report last week.
Alongside the lock-in effect, construction has failed to make up for a years-long shortage of new homes, exacerbating the shortfall.
While the lock-in effect remains a significant factor, its impact may be waning as some home owners encounter major life events or other circumstances that force them to move, even if it entails taking on a loan with a higher mortgage rate, Liu said.
“If they really do have to move, maybe they would be more willing to yield to this economic logic,” Liu added.
If homebuyers do move forward with a purchase, they may benefit from major price discounts, Redfin found this month. In 2025, homebuyers received average discounts that amount to 7.9% off a home’s initial listing price, Redfin said, making it the largest average discount in 13 years.
“Homebuyers are more likely to get discounts than they were in recent years because it’s the strongest buyer’s market in recent history,” said Lily Katz and Asad Khan, co-authors of the Redfin report.
Positive signals for homebuyers will likely continue as elevated mortgage rates weigh on consumer demand, slowing the rise in prices, some analysts said. But, they cautioned, an unexpected spike in mortgage rates could hike borrowing costs for homebuyers or an economic slowdown may crimp purchasing power.
“There is uncertainty over the outlook for interest rates,” Liu said. “So the overall price outlook is uncertain.”
U.S. Federal Reserve Chair Jerome Powell. (Li Yuanqing/Xinhua via Getty Images)
(NEW YORK) — An inflation report on Tuesday is set to provide a key gauge of the nation’s economy, just days after reports of a Department of Justice probe into Federal Reserve Chair Jerome Powell brought fresh scrutiny to the independence of the central bank and its capacity to manage price increases.
Economists expect year-over-year inflation to have been left unchanged at 2.7% in December. Inflation stands at its lowest level since July, but it remains nearly a percentage point higher than the Fed’s target rate of 2%, according to the U.S. Bureau of Labor Statistics.
Prices for some high-profile items like coffee and beef continue to soar.
Coffee prices jumped nearly 19% year-over-year in November, the most recent month for which data is available. Beef prices climbed almost 16% over that span. Egg prices plummeted in November, however, falling 13% compared to the previous year.
The onset of elevated inflation alongside sluggish hiring in recent months had put the Fed in a difficult position, even before the DOJ opened a probe into Powell.
The central bank must balance a dual mandate to keep inflation under control and maximize employment. To address pressure on both of its goals, the Fed primarily holds a single tool: interest rates.
The Fed cut interest rates at three consecutive meetings late last year in an effort to boost the flagging labor market. Still, borrowing costs remain well above a 0% rate established at the outset of the COVID-19 pandemic.
The criminal probe into Powell appears to center on allegations of false testimony he made about cost overruns in a renovation of the Fed’s headquarters during a congressional hearing in June.
Powell, who was appointed by Trump in 2017, issued a rare video message on Sunday night rebuking the investigation as a politically motivated effort to influence the Fed’s interest rate policy.
A bipartisan group of economists and former top Fed officials on Monday issued a joint statement condemning the probe as an attempt to undermine the Fed’s political independence.
The investigation follows months of strident criticism leveled at the Fed by President Donald Trump, who has urged the central bank to significantly reduce interest rates. Trump denied any involvement in the criminal investigation during a brief interview with NBC News on Sunday night.
In a statement to ABC News, a spokesperson for Attorney General Pam Bondi said, “The Attorney General has instructed her U.S. Attorneys to prioritize investigating any abuse of taxpayer dollars.”
A longstanding norm of independence usually insulates the Fed from direct political interference.
In the event a central bank lacks independence, policymakers tend to favor lower interest rates as a means of boosting short-term economic activity, analysts previously told ABC News. But, they added, that posture poses a major risk in the possibility of years-long inflation fueled by a rise in consumer demand, untethered by interest rates.
Stocks closed higher on Monday, shrugging off a dip earlier in the day after reports of the DOJ probe into Powell.
Treasury yields, however, also ticked up on Monday, suggesting possible concern about the Fed’s ability to constrain inflation.
Since bonds pay a given investor a fixed amount each year, the specter of inflation risks devaluing the asset and, in turn, makes bonds less attractive. When bond prices fall due to a drop in demand for Treasuries, bond yields rise.
