Stocks were under pressure and oil climbed as Iran intensified its rhetoric against Israel after an explosion at a Gaza hospital that complicated diplomatic efforts to rein in the Middle East conflict.
(Bloomberg) — Stocks were under pressure and oil climbed as Iran intensified its rhetoric against Israel after an explosion at a Gaza hospital that complicated diplomatic efforts to rein in the Middle East conflict.
Megacaps led losses as Treasury yields rose ahead of an auction of 20-year bonds, with Nvidia Corp. down 3.5% and Tesla Inc. sliding ahead of its results. Morgan Stanley sank the most since 2020 as profit fell on an investment-bank slowdown. United Airlines Holdings Inc. tumbled 8% after warning the Israel-Hamas war and higher jet fuel costs would weigh on earnings. Procter & Gamble Co. gained as sales beat estimates.
Read: How Iran’s Role Risks Widening the Israel-Hamas War: QuickTake
West Texas Intermediate oil approached $90 a barrel, before paring gains. Traders have been on alert in case Israel opts to launch a ground offensive into Gaza, potentially igniting a broader conflict that may draw in Iran, a key crude supplier, and other nations. US President Joe Biden said the Pentagon had shown him evidence indicating that the Israeli military was not likely behind a deadly blast at a Gaza City hospital that left hundreds dead.
“The risks of an escalation have risen on the back of the latest news reports regarding the hospital bombing,” said Jane Foley, head of foreign-exchange strategy at Rabobank. While there have been few signs of panic, “on any clear escalation, we can expect to see a ratcheting up of risk aversion,” she said.
Traders also sifted through more Fedspeak and awaited the central bank’s Beige Book for clues on the outlook for monetary policy. Federal Reserve Governor Christopher Waller said policymakers can wait and gather more data before deciding if the economy needs further monetary restraint, signaling that he favors holding rates steady next month.
Fed Chair Jerome Powell is set to speak at the Economic Club of New York on Thursday.
There’s been a lot of investor anxiety on whether upside economic surprises could lead the Fed to tighten further, according to Krishna Guha at Evercore.
However, we think Powell will stick to the message delivered by Vice-Chair Philip Jefferson that the data has been strong, “but there has also been a big move in yields, which has tightened financial conditions,” Guha added. “So no urgency for a policy response in November and the Fed can adopt a wait-and-see approach.”
The Treasury market is laboring under the twin burdens of a US economy and inflation that have yet to buckle despite Fed rate increases totaling more than 5 percentage points, and growth in the supply of notes and bonds.
Yields on two- to 10-year Treasuries rose the highest levels since 2006-2007, and the 30-year yield topped 5%, approaching a multiyear high reached last week. Across the maturity spectrum, only five- to 10-year yields remain below 5%.
Corporate Highlights
- Nasdaq Inc. reported sales that beat expectations after the initial public offering market picked up last quarter.
- U.S. Bancorp said profit fell in the third quarter as the biggest US regional lender increased its provisions for credit losses.
- Interactive Brokers Group Inc. tempered its guidance for accounts growth.
- Ally Financial Inc. posted third-quarter profit that beat analyst estimates even as consumers struggled to make loan payments.
- ASML Holding NV orders plunged in the third quarter amid a sector-wide slump in the semiconductor industry that has left the company increasingly reliant on revenue from China.
- Abbott Laboratories narrowed its annual profit forecast as it beat estimates for quarterly results, citing growth in medical devices for heart disease and diabetes.
- Spirit AeroSystems Holdings Inc. restructured key supplier contracts with its biggest customer, Boeing Co., to stem the aircraft-parts maker’s deteriorating financial performance, speed production and improve build quality.
Key events this week:
- Australia unemployment, Thursday
- Japan trade, Thursday
- China property prices, Thursday
- US initial jobless claims, existing home sales, leading index, Thursday
- Federal Reserve Chair Jerome Powell, Chicago Fed President Austan Goolsbee, Atlanta Fed President Raphael Bostic, Philadelphia Fed President Patrick Harker, Dallas Fed President Lorie Logan speak at different events, Thursday
- Japan CPI, Friday
- China loan prime rates, Friday
- Philadelphia Fed President Patrick Harker speaks, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.7% as of 12:12 p.m. New York time
- The Nasdaq 100 fell 0.5%
- The Dow Jones Industrial Average fell 0.5%
- The MSCI World index fell 0.8%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.5% to $1.0529
- The British pound fell 0.3% to $1.2146
- The Japanese yen was little changed at 149.82 per dollar
Cryptocurrencies
- Bitcoin fell 0.3% to $28,378.49
- Ether rose 0.9% to $1,573.94
Bonds
- The yield on 10-year Treasuries advanced seven basis points to 4.91%
- Germany’s 10-year yield advanced four basis points to 2.92%
- Britain’s 10-year yield advanced 15 basis points to 4.66%
Commodities
- West Texas Intermediate crude rose 1.5% to $87.95 a barrel
- Gold futures rose 1.2% to $1,959.20 an ounce
This story was produced with the assistance of Bloomberg Automation.
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