(AP) — Stocks snapped higher on Wall Street and oil prices sank following signs that the U.S. and Iran were backing away from the edge of war. The rally capped a whirlwind of reversals. Markets around the world initially reeled early Wednesday after Iran fired missiles at two military bases in Iraq that house U.S. troops, retaliation for a U.S. drone strike that killed an Iranian general. The S&P 500 rose 15 points, or 0.5%, to 3,253. The Dow Jones Industrial Average rose 161 points, or 0.6%, to 28,745. The Nasdaq added 60 points, or 0.7%, to 9,129, a record. Bond prices fell, sending yields higher.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
U.S. stocks climbed toward records Wednesday on hopes that the United States and Iran were backing away from the edge of war.

The rally capped a whirlwind of reversals in markets around the world.

Investments initially reeled early Wednesday after Iran fired missiles at two military bases in Iraq that house U.S. troops, retaliation for a U.S. drone strike that killed a top Iranian general last week.

Gold soared as dollars poured into safer investments, crude oil jumped on expectations that a possible war would damage supplies and the futures market suggested U.S. stocks were set to drop sharply as soon as trading opened in New York. But the selling abated as reports suggested no Americans died and after Iran’s foreign minister said his country had concluded “proportionate measures in self-defense.”

When trading opened, the S&P 500 pushed modestly higher, and it nearly tripled its gain after President Donald Trump confirmed that no Americans were hurt and that Iran “appears to be standing down.” Trump suggested adding economic sanctions on Iran, but he added that the U.S. is “ready to embrace peace with all who seek it.” That fit with the market’s hopes that no further escalations may be on the way, at least for now.

Not only did stocks climb, crude oil slumped sharply and gold fell for the first time in 11 days. Treasury yields rose in a sign of optimism, and a measure of fear in the stock market eased lower.

The stock market has historically bounced back quickly from geopolitical shocks, such as Friday’s U.S. killing of Iranian Gen. Qassem Soleimani, as long as they don’t result in a war and recession, said Linda Duessel, senior equity strategist at Federated Investors.

“Geopolitical shocks have resulted in sharp, short pullbacks, much of which is recovered in the next few months, and I suspect everyone in this business knows that data point and uses any opportunity to buy up stocks,” she said.

With central banks around the world pushing stimulus and U.S. households remaining resilient amid a solid job market, she said she thinks the U.S. economy is likely to keep growing unless an actual war breaks out or inflation unexpectedly bursts higher.

“You don’t get into trouble in the market unless recession is on the horizon,” she said, “and we have a very hard time putting together a scenario where we have a recession anytime soon.”

KEEPING SCORE: The S&P 500 was up 0.6% at 3,258.02, as of 2:30 pm. Eastern time. If it stays that high, it would top its prior record of 3,257.85 set last week.

The Dow Jones Industrial Average gained 197 points, or 0.7%, to 28,780, and the Nasdaq composite added 0.8%.

SHARP REVERSALS: Benchmark U.S. crude jumped as high as $65.65 per barrel in overnight trading, when worries about possible disruptions to oil supplies were at their peak. But the price sank through the day, with losses accelerating after a U.S. government report showed that the amount of oil supplies in inventories rose last week.

Benchmark U.S. crude fell $3.09, or 4.9%, to settle at $59.61. Brent crude, the international standard, lost $2.95, or 4.4%, to $65.36 per barrel.

Gold sank $14.40 to settle at $1,557.40 per ounce. It had climbed as high as $1,604.20 per ounce in overnight trading.

MARKETS OVERSEAS: Stock indexes slumped sharply in Asia, but the selling eased up as trading moved westward through the day.

Japan’s Nikkei 225 index lost 1.6%, South Korea’s Kopsi dropped 1.1% and the Hang Seng in Hong Kong fell 0.8%.

In Europe, Germany’s DAX returned 0.7%, and France’s CAC 40 rose 0.3%. The FTSE 100 in London was virtually flat.

YIELDS: The yield on the 10-year Treasury sank as low as 1.70% when worries were at their height, but they climbed through the day and were at 1.87% in afternoon trading, up from 1.82% late Tuesday.

The two-year yield rose to 1.57% from 1.53%, and the 30-year yield climbed to 2.36% from 2.30%. Treasury yields tend to move higher with investor optimism about the economy’s prospects.

WEAK RESULTS: Walgreens fell 5.8 % after reporting a disappointing 25% drop in profit during its fiscal first quarter on weak sales growth. The world’s largest drugstore chain is going through a cost-cutting program and expects earnings to be flat this year.

JET CONCERNS: Boeing fell 1.4% after one of its 737-800 aircraft flown by Ukraine International Airlines crashed in Iran shortly after takeoff, killing all on board. The cause of the crash is under investigation. It occurred after Iran fired missiles at U.S. bases in Iraq. Boeing is also still dealing with the grounding of its 737-Max jets because of catastrophic technical issues.