(March 24): US stocks opened in the red as the price of oil rebounded, with fighting between the US-Israel alliance and Iran raging unabated. Alternative asset managers also declined after Ares Management Corp and Apollo Global Management Inc became the latest firms to curb withdrawals from some funds, rekindling investor concerns about private credit.
The S&P 500 Index fell 0.7% at 9:45am in New York, with 10 of 11 sectors trading lower. Energy was the sole sector in the green. The Nasdaq 100 Index shed 0.8%. West Texas Intermediate crude rose about 5%. Iran carried out overnight attacks on multiple Israeli cities, as well as US bases in the Middle East. Israel launched a wave of strikes in western and central Iran. Plus, Iran appointed a hardliner as its top national-security leader, replacing Ali Larijani, who was killed last week.
“We are not dealing with single decision-maker dynamics,” Helima Croft, head of global commodity strategy at RBC Capital Markets, wrote in a note. “Unlike the case with tariffs or Greenland, multiple stakeholders have a say in how this war ends, and ships, not soundbites, will likely be what ultimately matters for physical markets.”
“There’s a lot of fear baked into the US equity markets right now,” said Jeffrey Favuzza, an equities trader at Jefferies Financial Group Inc, citing the CNN Fear and Greed Index at 16 and the VIX Index in the mid-20s. Even so, he noted that S&P 500 is just about 6% off all-time highs and pointed to strong earnings-per-share estimate revisions, which have been pushing price-to-earnings multiples on the index lower.
“The multiple draw-down would tell you that we’re getting close to a bottom,” Favuzza said. “The actual 6% draw-down would tell you this is just a run-of-the-mill draw-down versus a real correction.”
Adding to investor concerns, Apollo Global Management Inc shares fell after the firm became one of the latest alternative asset managers to curb redemptions from one of its largest non-traded private credit funds. Apollo Debt Solutions, a US$25 billion ($31.9 billion) business development company, capped withdrawals at 5% of outstanding shares after clients sought to redeem 11.2%. Ares also limited redemptions at its US$10.7 billion private credit fund.
See also: Stocks rise, oil falls as Trump eases Iran threats
“We believe Apollo’s decision to ‘hold the line’ at 5% for the quarter and prorate redemptions is doing right by their investors and prevents incremental leverage, cash drawdowns, or forced asset sales,” Evercore ISI analyst Glenn Schorr wrote in a note. “While no investor or LP likes to see write-downs, investors have likely priced that, to some degree, into the parent company stocks.”
In deals news, Estée Lauder Cos said it’s in talks to buy Puig Brands SA, creating a cosmetics giant with about US$20 billion in annual sales.
US stocks had rallied on Monday after President Donald Trump ordered the Pentagon to hold off on military strikes against Iranian energy infrastructure, spurring a retreat in oil prices.
See also: US stocks drop to six-month low on angst over prolonged war
“While Monday’s bounce produced gains across the board, its afternoon fade is evidence that this is just a relief rally in a downtrend with deteriorating breadth,” Piper Sandler chief market technician Craig Johnson wrote. “Until proven otherwise, investors should use sharp headline-driven rallies with skepticism and wait for evidence that this is more than just an oversold relief rally.”
Sectors to watch
- Financials stocks with deal news in focus. Sumitomo Mitsui Financial Group Inc was earlier said to have been working on plans for a potential takeover of Jefferies Financial Group Inc. Later, however, SFMG was said to have no immediate plan to take over the bank. Trian Fund Management and General Catalyst Group also boosted their offer for Janus Henderson Group. Prediction-market firm Kalshi is partnering with Fidelity National Information Service to launch FIS CD Prediction Clearing, Barron’s reported.
- Airline stocks, as legislators in both parties were optimistic about reaching an agreement to end the five-week partial shutdown of the Department of Homeland Security, which has increasingly snarled air travel across the United States. Shares of major contractors to DHS slipped as the partial shutdown of the department has weighed on investor sentiment.
Uploaded by Magessan Varatharaja
