Stocks fell around the world, while bonds climbed with gold amid concern the Israel war with Hamas will escalate into a wider conflict in the Middle East. Oil dropped after hitting $90 a barrel.
(Bloomberg) — Stocks fell around the world, while bonds climbed with gold amid concern the Israel war with Hamas will escalate into a wider conflict in the Middle East. Oil dropped after hitting $90 a barrel.
The S&P 500 headed toward its fourth straight loss, approaching its key 200-day moving average. West Texas Intermediate crude slid to around $89. Treasury yields pared weekly increases that pushed the 10-year rate to almost 5%. The dollar fluctuated.
Hamas said two US citizens held in Gaza have been released. Leaders from around the region are heading to Cairo for a Saturday summit on the crisis. Israel’s military said it struck Hamas targets in Gaza overnight. Israel also responded to fire from Lebanon by hitting Hezbollah assets. The Iran-backed militant group said it fired guided missiles at several Israeli sites.
“The ongoing situation in the Middle East has triggered a surge of volatility in the oil and stock markets, compelling investors to re-evaluate their strategies and shift their focus from riskier assets to ‘safer’ investments,” said Fawad Razaqzada, market analyst at City Index and Forex.com.
Read: Oil Angst Only Gets Worse as Iran Question Festers: Surveillance
The US stock market has been whipped around in recent weeks by rising geopolitical concerns, climbing Treasury yields and growing worries about interest rates staying elevated for longer.
Federal Reserve Bank of Cleveland President Loretta Mester said the US central bank is close to wrapping up its tightening campaign if the economy evolves as expected.
Traders also waded through a raft corporate earnings. Of the 86 companies in S&P 500 that have announced results through Friday morning, 74% beat analysts’ profit estimates, compared with 78% for the whole season a year ago, according to data compiled by Bloomberg.
Individual shares reacted to earnings announcements in the week or so since Corporate America started reporting results. But conflict in the Middle East and elevated Treasury yields have taken precedence, causing S&P 500 constituents to increasingly move in unison as global events sway markets broadly.
In half the trading sessions since Oct. 13, when the reporting cycle kicked off, at least 400 members in the S&P 500 have moved in the same direction. It’s a frequency that didn’t appear once in comparable weeks the past three earnings periods.
While the S&P 500’s declines this week have appeared largely orderly, the nearest futures contracts tied to the Cboe Volatility Index — also known as the VIX and a measure of expected swings in America’s benchmark equity gauge — closed Thursday in a pattern known as backwardation. It’s a telltale sign of mounting distress, as traders anticipate more volatility in the near-term than further out in the future.
Read: VIX Is in Backwardation! Here’s Why and What It Means: QuickTake
Corporate News
- US airline shares were on track for their longest weekly slump in over two years amid rising crude prices.
- Banks underperformed as Regions Financial Corp. warned of further declines in net interest income.
- American Express Co. saw volumes on its cards slow faster than expected in the third quarter.
- SLB, the biggest oil-services provider, posted its first sequential dip in North American sales since the start of 2021.
- Solar stocks tumbled after SolarEdge Technologies Inc. warned that third-quarter revenue will be well below its guidance, citing “substantial” cancellations and delayed orders.
- General Motors Co., Ford Motor Co. and Stellantis NV negotiations’ with the United Auto Workers have accelerated in recent days, people familiar with the discussions said.
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.9% as of 2:28 p.m. New York time
- The Nasdaq 100 fell 1.2%
- The Dow Jones Industrial Average fell 0.6%
- The MSCI World index fell 0.9%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0588
- The British pound was little changed at $1.2151
- The Japanese yen was little changed at 149.85 per dollar
Cryptocurrencies
- Bitcoin rose 2.8% to $29,521.58
- Ether rose 2.6% to $1,608.71
Bonds
- The yield on 10-year Treasuries declined seven basis points to 4.92%
- Germany’s 10-year yield declined four basis points to 2.89%
- Britain’s 10-year yield declined two basis points to 4.65%
Commodities
- West Texas Intermediate crude fell 0.5% to $88.89 a barrel
- Gold futures rose 0.5% to $1,990 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Yongchang Chin and Alex Longley.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.