Stock Market Falls as Middle East Conflict Escalates
Escalating Conflict Impacts Global Markets
The S&P 500 and Nasdaq experienced a decline as tensions between Israel and Hamas intensified, causing turmoil in global markets. Investors sought refuge in safe-haven assets, while crude oil prices surged by over 3%.
Israel and Hamas Conflict Deepens
Israel reported that armed infiltrators from Lebanon were killed by their troops, sparking concerns that the conflict could escalate further. Two days prior, Hamas gunmen from Gaza had launched a deadly attack. Israel’s military response included calling up 300,000 reservists and implementing a total blockade of the Gaza Strip, indicating the possibility of a ground assault.
US Shows Support for Israel
US Defense Secretary Lloyd Austin announced that multiple military ships and aircraft would be sent closer to Israel to demonstrate support for the country.
Stock Market Performance
As of 9:40 a.m. ET, the Dow Jones Industrial Average was down 12.14 points, the S&P 500 was down 14.98 points, and the Nasdaq was down 127.02 points. The CBOE volatility index, known as Wall Street’s “fear gauge,” also rose to 18.59, indicating increased investor anxiety.
Technology Stocks and Safe-Haven Assets
Major technology stocks, including Apple, Microsoft, Alphabet, Nvidia, and Amazon.com, experienced declines ranging from 0.5% to 2.3%. On the other hand, traditional safe-haven assets such as gold and the US dollar saw gains. Crude oil prices also increased.
Volatility Expected in Stock and Oil Markets
Analysts anticipate short-term volatility in both the stock market and oil market as investors process the heightened tensions in the Middle East. James Demmert, Chief Investment Officer at Main Street Research, expressed this expectation.
Airlines and Defense Companies
United Airlines, Delta Air Lines, and American Airlines suspended direct flights to Tel Aviv, leading to a 4.4% drop in the S&P 500 Passenger Airlines index. However, defense companies such as Northrop Grumman, RTX, General Dynamics, and Lockheed Martin saw their stock prices rise between 5.5% and 8.5%.
Market Focus in the Coming Week
Investors will closely monitor key inflation readings, including producer and consumer price indexes for September, as well as the September meeting minutes of the Federal Reserve. The upcoming quarterly earnings reports from major banks like JPMorgan Chase, Wells Fargo, Citigroup, and asset manager BlackRock will also be of interest.
Impact on Tesla and Market Performance
Tesla experienced a 2.5% decrease in stock value as data showed a 10.9% year-on-year decline in the company’s China-made electric vehicle sales volume for September.
Market Statistics
Declining issues outnumbered advancers on the NYSE by a ratio of 1.45-to-1 and on the Nasdaq by a ratio of 2.40-to-1. The S&P index recorded four new 52-week highs and six new lows, while the Nasdaq recorded 16 new highs and 113 new lows.
