Equities took a beating while oil prices leaped on Friday, due to Israel initiating actions against Iran’s nuclear program and its essential staff, stirring up fears of a regional conflict escalating. At one point in the afternoon, the Dow Jones Industrial Average plummeted by 1.5%, translating into a loss of more than 600 points. Concurrently, the S&P 500 and the tech-dominated Nasdaq Composite were relatively less affected, recording a 0.7% decrease, although both managed to recover from more significant drops earlier in the day.
Despite the bearish trend on Friday, all major indexes were on track to finish the week with gains, marking the third week of positive performance. Optimism about ongoing trade deal progress and better-than-anticipated inflation data had stimulated Thursday’s market close in the green. However, sentiments shifted with the tensions in the Middle East.
West Texas Intermediate (WTI) futures, the benchmark for U.S. crude oil, were caught up in the turbulence, experiencing a surge of 6.9% that pushed prices up to $72.70 per barrel. The main driver was anxiety over potential interruptions in supply chains. In the face of uncertainty, gold, often considered a stable asset in troubled times, experienced a 1.4% upswing to reach $3,450 an ounce, its second-highest level in two months.
The travel sector bore the brunt of the disturbances in the stock market on Friday, with major aviation and cruising companies seeing significant drops in share prices. American Airlines and United Airlines, two of the biggest players, saw their shares plummet by over 3%. At the same time, cruise operators Carnival Corp. and Norwegian Cruise line experienced a slide of around 4%.
Tech giants, which had been leading the recent stock market rally, mostly experienced a downturn. Prominent chipmakers Nvidia and Broadcom both saw nearly 2% wiped off their share values. Apple dropped by a percentage point, while Microsoft, Amazon, and Meta Platforms registered a slight decrease. Only Tesla and Alphabet bucked the trend, with Tesla rebounding over 3% after crashing its four-day winning streak, and Alphabet reporting marginal gains.
Further tech sector shuffles saw Adobe shares plummet 5%, making it the top decliner on the S&P 500. The company was unable to meet the expectations from its quarterly results. Oracle, on the other hand, observing a 7% surge to a new all-time high, continues to ride on waves of investor positivity, responding to its optimistic growth predictions.
For the oil industry, the situation was different. Oil firms enjoyed a massive lift, mirroring the spike in crude oil. Oil producers APA Corp., Occidental Petroleum, and Diamondback Energy all enjoyed a growth surge of about 3%. The industry giants Exxon Mobil and ConocoPhillips did not lag, both appreciating by about 1.5%.
Meanwhile, defense sector shares also moved positively. Pioneers like Northrop Grumman, Lockheed Martin, and RTX Corp. saw their equity value rise by a little over 3%, suggesting an expected return to defense stocks possibly driven by geopolitical tensions.
Bitcoin, on the other hand, ended its session at $105,200, down from the previous day’s $106,000, but still up from a sub-$103,000 dip. The cryptocurrency was trading well above $110,000 at some point this week, indicating the high volatility that is often associated with digital currencies.
The 10-year Treasury note yield, which influences consumer and business loan costs, was recorded at 4.44%, indicating a rise from 4.36% the previous day and from the lowest mark of 4.32% noted earlier on Friday, which was the lowest in the past month.
Finally, the U.S. dollar index, which gauges the greenback’s strength against a group of foreign currencies, rose by 0.3% to 98.20, resisting the fall after hitting a three-year low the previous day. This represents the struggle of the currency in the face of significant geopolitical and economic shifts.