Stock Market Today: Dow up despite Israel-Hamas war as Fed members signal caution

investing.com:

Investing.com — The Dow closed higher Monday, as investors bought the early-day weakness after weighing up a more cautious tone rate hike from Federal Reserve officials and rising geopolitical tensions amid fears the Israel-Hamas conflict.  

The Dow Jones Industrial Average rose 0.5%, 197 points, Nasdaq rose 0.3% and the S&P 500 rose 0.6%.

Federal Reserve officials including Fed Vice Chair Philip Jefferson and Dallas Fed president Lorie Logan struck a caution tone on the need for further rate hikes, indicating that the recent climb in Treasury yields, which has tightened financial conditions, would help the Fed in its battle against inflation. 

«We are in a sensitive period of risk management, where we have to balance the risk of not having tightened enough, against the risk of policy being too restrictive,» Jefferson said, wary that tightening too much risks a larger than intended slowdown in the economy. 

Logan, meanwhile, said «there may be less need to raise the fed funds rate» following a rise in long-term interest rates. 

Following the surprise Hamas’ attack on Israel, and subsequent declaration of war by Israel, geopolitical tensions in the Middle-East dominated investor attention and briefly kept a lid on their appetite for risk.

The escalating conflict comes just as optimism was building that the U.S. was inching closer to brokering a deal that would normalize ties between Saudi Arabia and Israel, potentially paving the way to the end of the Arab-Israeli conflict.    

“The Saudi leadership has insisted on Israel making significant concessions to the Palestinians as part of any normalization agreement and given what has transpired, it is very difficult to envision a government that is now on war footing to