Wall Street Falls as Middle East Tensions Increase
Wall Street’s main indexes fell on Wednesday as tensions in the Middle East escalated, impacting investor sentiment. Alongside this, market participants are closely monitoring earnings reports to assess the effects of inflation and high interest rates on businesses.
U.S. President Joe Biden expressed solidarity with Israel during his Middle East mission, which was disrupted by a massive explosion at a Gaza hospital. Biden stated that the explosion seemed to be caused by Israel’s adversaries.
As risk-off sentiment grew, demand for safe-haven assets surged, leading to a more than two-month high in gold prices and a strengthening U.S. dollar. Brian Jacobsen, chief economist at Annex Wealth Management, explained, “Gold has been holding with safe haven demand, and even though Treasuries aren’t doing the greatest, the dollar has been faring fairly well with the increased tensions over there.”
Long-dated Treasury yields reached multi-year highs due to a robust rebound in U.S. homebuilding and other positive economic data, raising concerns that the Federal Reserve may delay rate cuts.
Despite a 1% increase in energy stocks driven by stronger crude prices, major sectors experienced a decline, with industrials and materials leading the way.
Morgan Stanley reported better-than-expected third-quarter profit, largely driven by a strong performance in its wealth management division, offsetting a decline in dealmaking. However, the company’s shares fell to a one-year low.
Abbott Laboratories saw a 2.8% increase in its stock price after surpassing third-quarter profit estimates, primarily due to strong sales of devices and diagnostics products.
Consumer goods manufacturer Procter & Gamble gained 2.1% as its quarterly sales exceeded market expectations.
Tesla and Netflix are set to release their quarterly results after the market closes. Both companies experienced a decline in their stock prices ahead of the announcements.
Later in the day, several Federal Reserve officials, including John Williams, Christopher Waller, and Michelle Bowman, are scheduled to speak, preceding Chair Jerome Powell’s remarks on Thursday.
The S&P 500, the Dow Jones Industrial Average, and the Nasdaq Composite all experienced a decline during morning trading.
Nvidia’s stock fell 3.6% following concerns over the Biden administration’s plans to halt shipments of advanced AI chips to China.
United Airlines Holdings predicted weaker fourth-quarter profit due to increased costs, resulting in an 8.3% stock price decrease. The S&P 500 passenger airlines index also hit a one-year low.
Declining issues outnumbered advancers on the NYSE and Nasdaq exchanges.
The S&P index recorded new highs and lows, while the Nasdaq recorded new highs and lows.
