US Stock Market Dips as Iran-Israel Tensions Rise

The US stock market opened lower on Friday. Investors reacted to rising oil prices and bond yields. This followed Israel’s airstrikes on Iran, which increased tensions in the Middle East.

Market Performance

The Dow Jones Industrial Average dropped over 480 points, a 1.12% decrease. The Nasdaq and S&P 500 also fell. Investors are worried about inflation and economic uncertainty.

Key Points:

• At 10:50 AM ET, the Dow Jones was down 682 points (-1.59%).
• The S&P 500 dropped 0.99%.
• The Nasdaq fell 1.14%.

Safe-Haven Assets and Oil Prices Rise

Safe-haven assets like gold rallied strongly, climbing nearly 1.75%. Investors’ risk appetite waned. Oil prices jumped nearly 8%, intensifying worries about supply constraints and their potential economic impact.

Additional Market Movements:

• The 10-year Treasury yield increased to 4.385%.
• The dollar strengthened against the euro.
• Shares of oil companies like Chevron and Halliburton rallied.

JBS Debuts on New York Stock Exchange

Brazilian meat giant JBS saw its shares fall 6% in early trading Friday. The company made its long-awaited debut on the New York Stock Exchange. This listing is a major milestone for JBS, founded 72 years ago and now one of the world’s largest meat producers.

JBS Key Facts:

• The US is a critical market for JBS, accounting for roughly half of its annual revenue.
• JBS employs over 72,000 people in the US.
• JBS is the largest beef producer in the US.
• It ranks second in poultry and pork production.

Global Oil Prices and Market Volatility

Global oil prices spiked sharply on Friday, triggering broader market volatility. Escalating geopolitical tensions in the Middle East rattled investor sentiment. US benchmark crude surged 7.1% to $72.88 per barrel, while Brent crude, the global benchmark, climbed 7.2% to $74.32.

Impact of Israel’s Strike:

• Israel launched a pre-emptive military strike on Iranian facilities.
• Fears of a wider regional conflict have arisen.
• Potential curtailment of Iranian oil exports is a concern.
• Energy prices could remain elevated worldwide.

Market Reactions and Analyst Insights

United Airlines dropped 5.2%, Delta Air Lines fell 4.5%, and Norwegian Cruise Line Holdings slipped 2.9%. Investors are concerned about higher fuel costs and potential disruptions to travel demand. Adobe tumbled 5.7% despite beating Wall Street profit expectations, as investors were unimpressed with the company’s forward guidance.

Energy and Defense Stocks:

• Energy and defense stocks rallied.
• Exxon Mobil rose 2.2%.
• ConocoPhillips added 2.3%.
• Lockheed Martin and Northrop Grumman both increased by 2.3%.

Gold and Treasury Prices

Gold climbed 1.8% to $3,463.70 per ounce as risk-averse investors sought safety amid the geopolitical turmoil. Treasury prices fell, pushing yields higher. The 10-year note edged up to 4.38% from 4.36%. The decline in bond prices reflected market fears that sustained high oil prices could reaccelerate inflation.

Federal Reserve’s Stance:

• Recent inflation data has shown moderation.
• Trump’s sweeping tariffs and the oil shock are potential triggers for renewed price pressures.
• The Fed has maintained a cautious stance, holding rates steady this year after three cuts in 2024.

Global Market Sentiment

Overseas, market sentiment was similarly negative. Germany’s DAX fell 1.4%, and France’s CAC 40 dropped 1.1%. There was a broad retreat across European and Asian equity markets.