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U.S. stocks ended mostly lower Friday, with the Dow Jones Industrial Average clinging to a slight gain as geopolitical fears intensified and a consumer-sentiment survey showed a jump in inflation expectations.
How did stock indexes trade?
-
The Dow Jones Industrial Average
DJIA
rose 39.15 points, 0.1%, to close at 33,670.29. -
The S&P 500
SPX
shed 21.83 points, or 0.5%, to finish at 4,327.78. -
The Nasdaq Composite
COMP
dropped 166.98 points, or 1.2%, to end at 13,407.23.
For the week, the Dow booked a gain of 0.8%, while the S&P 500 rose 0.4% and the Nasdaq slipped 0.2%, according to Dow Jones Market Data. The Dow snapped a three-week losing streak, while the S&P 500 booked back-to-back weekly gains.
What drove markets?
U.S. stocks finished mostly lower Friday after heightened geopolitical tensions rattled investors.
The pressure came despite the Dow Jones Industrial Average being buoyed in part by stronger-than-expected earnings from big Wall Street banks.
“Going into the weekend, it looks as if there’s safe-haven buying going on,” said Quincy Krosby, chief global strategist for LPL Financial, in a phone interview Friday, pointing to investors turning to Treasurys and gold amid worries the conflict in the Middle East risks broadening.
The market is weighing the possibility that Israel may “unleash a massive incursion into Gaza,” she said. “You don’t want to show up on Monday morning and everything has changed.”
Israel’s military has ordered 1 million people to leave Gaza, raising fears a ground offensive could be under way soon, escalating tensions in the Middle East.
Buying of U.S. Treasurys on Friday sent yields lower, with the 10-year rate
BX:TMUBMUSD10Y
falling 8.2 basis points to 4.628%, according to Dow Jones Market Data. Gold prices
GC00,
climbed sharply, with the December contract
GCZ23,
settling 3.1% higher at $1,941.50 an ounce.
“It’s a war trade,” Jay Hatfield, chief executive officer and portfolio manager at Infrastructure Capital Advisors, said during a phone interview with MarketWatch. “Investors are selling tech, buying energy, buying bonds and buying gold.”
Oil prices have surged amid fears over the war in the Middle East, with West Texas Intermediate crude
CL00,
rising almost 6% on Friday to settle at $87.69 a barrel. U.S. tightening sanctions on Russian crude sales also helped boost oil prices.
Beyond geopolitical tensions, the University of Michigan’s latest reading on consumer sentiment, released Friday morning shortly after the stock market’s open, also created some concern in markets. The survey data showed consumers’ one-year inflation expectations rising to 3.8% from 3.2% in September.
“This is something the Fed does not want to see,” said Krosby. Food and gasoline prices remain elevated, and that’s “starting to hit the consumer’s view of future inflation.”
The Federal Reserve has been trying to bring down inflation by tightening monetary policy through interest-rate hikes.
U.S. stocks had opened higher on Friday after major Wall Street banks, including JPMorgan Chase & Co.
JPM,
Citigroup Inc.
C,
and Wells Fargo & Co.
WFC,
reported earnings for the third quarter that were stronger than analysts estimated.
JPMorgan CEO Jamie Dimon said the bank delivered “solid” results against a tough macroeconomic backdrop now complicated by another war. But he also delivered some more ominous commentary. “This may be the most dangerous time the world has seen in decades,” he said.
The S&P 500’s financials sector
XX:SP500.40
eked out a 0.2% gain on Friday, while shares of JPMorgan climbed 1.5% and Wells Fargo jumped 3.1%, according to FactSet data. Energy
XX:SP500.10
was the best-performing sector on Friday, closing up more than 2%.
“If the earnings season continues to surprise to the upside and delivers solid earnings reports with positive guidance, it should be extremely helpful for the market,” said Krosby.
In the meantime, the S&P 500 index looks expensive and vulnerable to a decline in the near term, as the Fed’s monetary tightening is still working through the U.S. economy, according to Jason Pride, chief of investment strategy and research at Glenmede.
There’s “still a greater than 50% chance of a recession in the back half of this year and into the beginning of next year,” Pride said in a phone interview on Friday, citing his base case.
Companies in focus
-
BlackRock Inc. shares
BLK,
-1.34%
fell 1.3% after the company’s earnings report. -
UnitedHealth Group Inc. shares
UNH,
+2.64%
climbed 2.6% after the company reported stronger-than-expected earnings for the third quarter. -
Novo Nordisk shares
NVO,
+1.96%
rallied about 2% after the drugmaker boosted its full-year 2023 profit and sales outlook, reflecting heightened expectations for Ozempic and Wegovy sales. -
Dollar General Corp. shares
DG,
+9.16%
surged 9.2% after the dollar-store chain said Todd Vasos was returning as chief executive after retiring less than a year ago. -
Microsoft Corp. shares
MSFT,
-1.04%
fell 1% after U.K. regulators on Friday gave the go-ahead for the tech giant’s $68.7 billion acquisition of videogame holding company Activision Blizzard, ending a long saga.
Barbara Kollmeyer contributed.
