U.S. stocks were lower Friday heading toward the closing bell, giving up their opening gains on geopolitical fears and as a consumer-sentiment survey showed a jump in inflation expectations.
How are stock indexes trading?
-
The Dow Jones Industrial Average
DJIA
was down almost 6 points, or less than 0.1%, at around 33,626 in choppy trade. -
The S&P 500
SPX
shed 27 points, or 0.6%, to trade around 4,323. -
The Nasdaq Composite
COMP
dropped almost 175 points, or 1.3%, to about 13,400.
For the week, the Dow was heading for a gain of 0.7%, while the S&P 500 was on pace to rise 0.3% and the Nasdaq was track to slip 0.2%, according to FactSet data, at last check.
What’s driving markets?
U.S. stocks were trading mostly lower Friday afternoon as heightened geopolitical tensions rattled investors.
The pressure came despite the Dow Jones Industrial Average being buoyed in part by by stronger-than-expected earnings from big Wall Street banks.
“Going into the weekend, it looks as if there’s safe-haven buying going on,” said Quincy Krosby, chief global strategist for LPL Financial, in a phone interview Friday, pointing to investors turning to Treasurys and gold amid worries the conflict in the Middle East risks broadening.
The market is weighing the possibility that Israel may “unleash a massive incursion into Gaza,” she said. “You don’t want to show up on Monday morning and everything has changed.”
Israel’s military has ordered more than 1 million people to leave Gaza, raising fears a ground offensive could be under way soon, escalating tensions in the Middle East.
Buying of U.S. Treasurys on Friday has sent yields lower, with 10-year Treasury rates
BX:TMUBMUSD10Y
falling 8.2 basis points to 4.628%, according to Dow Jones Market Data. Gold prices
GC00,
climbed sharply, with the December contract
GCZ23,
settling 3.1% higher at $1,941.50 an ounce.
“It’s a war trade,” said Jay Hatfield, chief executive officer and portfolio manager at Infrastructure Capital Advisors, during a phone interview with MarketWatch. “Investors are selling tech, buying energy, buying bonds and buying gold.”
Oil prices have surged amid fears over the war in the Middle East, with West Texas Intermediate crude
CL00,
rising almost 6% on Friday to settle at $87.69 a barrel. U.S. tightening sanctions on Russian crude sales also helped boost oil prices.
Beyond geopolitical tensions, the University of Michigan’s latest reading on consumer sentiment, released Friday morning shortly after the stock market’s open, also created some concern in markets. The survey data showed consumers’ one-year inflation expectations rising to 3.8%, from 3.2% in September.
“This is something the Fed does not want to see,” said Krosby. Food and gasoline price remain elevated and that’s “starting to hit the consumer’s view of future inflation.”
The Federal Reserve has been trying to bring down inflation by tightening monetary policy through interest-rate hikes.
U.S. stocks had opened higher on Friday, after major Wall Street banks, including JPMorgan Chase & Co.
JPM,
Citigroup Inc.
C,
and Wells Fargo & Co.
WFC,
reported earnings for the third quarter that were stronger than analysts estimated.
Read: JPMorgan Chase’s Q3 profit rises by 35%, bolstered by increased interest income as consumers and businesses ‘generally remain healthy’
JPMorgan Chief Executive Jamie Dimon said the bank delivered “solid” results amid a tough macroeconomic backdrop now complicated by another war. But he also delivered some more ominous commentary about markets and the economy.
“This may be the most dangerous time the world has seen in decades,” he said.
The S&P 500’s financials sector
XX:SP500.40
was edging higher Friday afternoon, while shares of JPMorgan and Wells Fargo posted sharp gains, according to FactSet data, at last check.
“If the earnings season continues to surprise to the upside and delivers solid earnings reports with positive guidance, it should be extremely helpful for the market,” said Krosby.
In the meantime, the S&P 500 index looks expensive and vulnerable to a decline in the near term as the Fed’s monetary tightening is still working through the U.S. economy, according to Jason Pride, chief of investment strategy and research at Glenmede.
There’s “still a greater than 50% chance of a recession in the back half of this year and into the beginning of next year,” Pride said in a phone interview on Friday, citing his base case.
Read: Q3 earnings are here: S&P 500 heads toward year of profit declines as JPMorgan, and Delta report this week
Companies in focus
-
BlackRock Inc.
BLK,
-1.38%
shares were lower after its earnings report. -
UnitedHealth Group Inc.
UNH,
+2.61%
shares were up sharply after reporting stronger-than-expected earnings for the third quarter. -
Novo Nordisk
NVO,
+1.95%
shares rallied after it boosted its full-year 2023 profit and sales outlook, reflecting heightened expectations for Ozempic and Wegovy sales. -
Dollar General Corp. shares
DG,
+9.16%
jumped after the dollar-store chain said that Todd Vasos was returning as chief executive after retiring less than a year ago. -
Microsoft Corp.
MSFT,
-1.04%
shares slipped after U.K. regulators on Friday gave Microsoft Corp. the go-ahead for the tech giant’s $68.7 billion acquisition of videogame holding company, Activision Blizzard, ending a long saga.
Barbara Kollmeyer contributed to this report.
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