At noon trading in New York, Wall Street experienced a significant decline, with all major stock indices in negative territory. Only the energy sector saw gains for the session. Additionally, 30-year Treasury yields surpassed the 5% mark, reaching their highest level in over 17 years.
The risk sentiment has been affected by recent events in the Middle East, particularly President Joe Biden’s condemnation of the attack on Gaza’s hospital, which led to over 500 casualties. The President has also promised “unprecedented package support” for Israel, pending approval from Congress.
Tech giants Tesla Inc. and Netflix Inc. are set to report their third-quarter earnings after the market closes.
Furthermore, oil prices have rallied due to Iran’s threat to impose an oil embargo on Israel. This surge was fueled by a larger-than-expected decrease in U.S. crude oil inventories last week.
In Wednesday’s trading, the S&P 500 and the Nasdaq 100 both dropped by 1%, while blue chip stocks in the Dow Jones Industrial Average fell by 0.7%. Small caps suffered even more, with the Russell 2000 index down by 1.7%.
Looking ahead, Chief Investment Officer John Lynch of Comerica believes that the S&P 500 Index may not surpass the 4,800 range due to geopolitical factors, interest rates, and inflation. Analysts project flat EPS for the S&P 500 in 2023 and a slightly lower projection for 2024 compared to consensus forecasts.
In Thursday’s trading, major U.S. equity ETFs experienced declines, with the SPDR S&P 500 ETF Trust, Invesco S&P 500 Equal Weight ETF, SPDR Dow Jones Industrial Average ETF, and Invesco QQQ Trust down by varying percentages.
The Energy Select Sector SPDR Fund was the only sector ETF to show gains, while the Consumer Discretionary Select Sector SPDR Fund was the worst performer, down by 2%.
Upcoming economic data includes speeches from Fed Governor Christopher Waller, Fed Governor Michelle Bowman, and Philadelphia Fed President Patrick Harker. The Fed will also release its Beige Book for insights into economic conditions in the 12 Federal Reserve districts.
Several stocks were in focus, including J.B. Hunt Transport Services, Inc. and United Airlines Holdings, Inc., which saw significant declines despite reporting earnings. Other stocks experienced mixed reactions to their earnings reports.
In commodities, crude oil prices rose by 1.2%, while Treasury yields and the dollar increased. European equity indices closed in negative territory, while gold and silver prices saw moderate gains. Bitcoin experienced a slight decline.
Looking forward, despite economic and geopolitical challenges, some analysts foresee a year-end rally for the S&P 500.