On Friday, the Nasdaq and the S&P 500 experienced significant declines, while Treasury yields decreased, reflecting investor concerns over lackluster earnings, uncertainty regarding central bank policy, and geopolitical tensions. Meanwhile, gold and crude oil prices rose as market participants monitored escalating turmoil in the Middle East.
The Dow was the only major U.S. equity index to gain ground, whereas the Nasdaq, influenced by declines in megacap tech and tech-related momentum stocks, dropped by 2.05%.
This session marked the sixth consecutive day of losses for both the S&P 500 and the Nasdaq, marking their longest losing streak since October 2022. For the week, the S&P 500 and the Dow recorded their most significant weekly percentage declines since March 2023, while the Nasdaq experienced its largest weekly drop since November 2022.
Tensions in the Middle East seemed to stabilize after Tehran played down Israel’s retaliatory drone strike against Iran, a move seemingly aimed at preventing further escalation in the region.
Peter Tuz, president of Chase Investment Counsel, noted, “The level of concern in the Middle East is higher than it was at any time since Oct 7. It’s close to the forefront of a lot of peoples’ minds.”
Expectations for the first-quarter earnings season have dampened, with analysts revising down the aggregate S&P 500 earnings growth estimate to 2.9% year-on-year, from the 5.1% estimate on April 1, according to LSEG.
Tuz commented on the situation, stating, “Next week is a big tech earnings week and that’s probably prompting some selling… I think some money is flowing out of them just out of concern that earnings and guidance won’t meet expectations.”
Chicago Federal Reserve President Austan Goolsbee remarked that the Fed’s current restrictive policy stance is “appropriate” given the strength of the economy and the slower-than-expected progress in reducing inflation towards its 2% target.
In terms of market performance, the Dow Jones Industrial Average rose by 211.02 points, or 0.56%, to 37,986.4, while the S&P 500 lost 43.89 points, or 0.88%, to 4,967.23, and the Nasdaq Composite dropped 319.49 points, or 2.05%, to 15,282.01.
European shares reached their lowest level in over a month but rebounded from their intraday lows as concerns over Middle East tensions eased and strong earnings provided some support. The pan-European STOXX 600 index lost 0.08%, and MSCI’s global stocks gauge shed 0.84%.
Emerging market stocks declined by 1.30%, and MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.61% lower, while Japan’s Nikkei lost 2.66%.
Treasury yields slightly decreased as investors favored safe-haven assets amid the potential escalation of the Middle East conflict. Benchmark 10-year notes rose 6/32 in price to yield 4.6228%, from 4.647% late on Thursday, and the 30-year bond rose 14/32 in price to yield 4.7168%, from 4.745% late on Thursday.
The dollar remained relatively stable as currency markets calmed down after an initial flight to the Swiss Franc and the yen following Israel’s drone attack on Iran.
The dollar index fell by 0.01%, with the euro up by 0.08% to $1.0652. The Japanese yen strengthened by 0.02% against the greenback at 154.63 per dollar, while sterling was last trading at $1.2371, down 0.51% on the day.
Initially, crude oil prices dipped as concerns over supply eased following Iran’s restrained response, but they later settled modestly higher amid ongoing uncertainties stemming from geopolitical instability.
U.S. crude rose by 0.50% to settle at $83.14 per barrel, while Brent settled at $87.29 per barrel, up 0.21% on the day. Gold continued its upward trajectory, on track for its fifth consecutive weekly gain, with spot gold adding 0.4% to $2,386.49 per ounce.
