- Nasdaq, S&P, Dow turn positive
- Oil price jumps on rising tension in the Middle East
- Airlines lower, defense stocks rise
4:25pm: Markets try to make sense of the Middle East
The Dow closed Monday up 197 points, 0.6%, at 33,605, the Nasdaq Composite added 53 points, 0.4%, to 13,484 and the S&P 500 improved 27 points, 0.6%, to 4,336. The small-cap Russell 2000 index gained 10 points 0.6%, to 1,756.
The market initially took a jolt following the attack on Israel by Hamas and subsequent Israeli missile strikes against the Gaza Strip. Oil prices jumped, and shares of airline companies tumbled on news that flights to Israel were canceled, according to reports. Meanwhile, defense contractors like Lockheed Martin (NYSE:LMT) and Northrop Grumman (NYSE:NOC) saw their stock rise.
“I think there’s a knee jerk reaction,” said Anna Rathbun, chief investment officer for CBIZ (NYSE:CBZ) Investment Advisory Services. “So there’s dust going up, and now the dust is coming back down. I think it will take a few days to really understand where the impact actually is.”
12:00pm: Airlines dive, defence stocks climb after attack on Israel
US stocks remained in the red at lunchtime but off early lows as investors assessed the fall-out from the attack on Israel.
At midday, the Dow Jones Industrial Average was down 11.45 points at 33,396.13, the S&P 500 was down 7.12 points, 0.2%, at 4,301.38 and the Nasdaq Composite was down 76.92 points, 0.6%, at 13,354.42.
Chris Beauchamp at online trading platform IG said: "After Friday’s post-NFP rally some trimming in equities was to be expected, but the weekend’s events have added extra impetus to the selling."
"But with recent put buying having hit a high for the year it seems like the risks are skewed to the upside for stocks."
"The scale of the violence shocked investors but for the moment it appears limited in its scope. Safe havens have been in demand, but a wider sell-off has been halted for the time being.”
Airlines were a weak feature as flight to Israel were canceled and on concerns the violence would hit demand - Delta fell 5.6% and United Airlines dipped 5.7%.
Heading the other were defence companies - Lockheed Martin (NYSE:LMT) jumped 8.1% and Northrop Grumman (NYSE:NOC) Corp leapt 11.7%,
9:45am: Tech weakens but rise in oil majors keeps Dow higher
The Nasdaq fell sharply at the open with sentiment hit by an the violence in the Middle East but a jump in oil stocks propped up the Dow.
Shortly after the opening bell, the Dow Jones Industrial Average was up 5.62 points at 33,413.20, the S&P 500 was down 14.87 points, 0.4%, at 4,293.63 and the Nasdaq Composite was down 129.11 points, 1.0%, at 13,302.24.
Craig Erlam at Oanda said: “The surprise attack by Hamas has fueled concerns about further instability in the Middle East which could in turn disrupt oil flows at a time when the market is already extremely tight and prices are high.”
“It's quite natural in these circumstances for investors to take a risk-averse approach while they gain a better understanding of what the knock-on effects will be - for example with the WSJ claiming that the attack was aided by Iran - and what that will ultimately mean for the global economy.”
“It comes at a time when there is already enormous uncertainty over the global economy going into 2024 with most central banks likely done with monetary tightening but some still warning of more to come.”
The jump in the oil price saw Exxon Mobil rise 3.5% and Chevron advance 2.4% while Arm Holdings rose 0.7% as Citi and Bank of America started coverage of the Cambridge-based firm with a buy rating and $65 price target.
But Datadog Inc (NASDAQ:DDOG) sold-off 4.7% as Bank of America downgraded its rating to neutral from buy with a $105 price target.
7:00am: Weak start expected after attacks on Israel
Stocks are expected to open lower after the attack on Israel by Hamas added geopolitical risk to an already fragile market dealing with inflated interest rates.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.4% lower, while those for the S&P 500 fell 0.5%, and contracts for the Nasdaq 100 futures were down 0.7%.
Oil prices jumped following the attack on concerns output from leading oil producers could be hit.
Ipek Ozkardeskaya at Swissquote Bank said: “It is difficult to predict the extent of the price action on geopolitical shocks. The fact that the US and Iran are pulled into the turmoil hints that tensions may further escalate.”
“From a price perspective, the $90pb level is expected to shelter decent offers in US crude, as escalation and prolongation of Mid-East tensions could be the final straw that could bring the world very close to the brink of recession, and temper appetite for oil. It's too early to call.”
Disney will be focus after The Wall Street Journal reported that activist investor Nelson Peltz plans to push for a seat on the board.
His firm, Trian Fund Management, owns a stake worth more than $2.5 billion in Disney, the report said, citing people familiar with the matter.
Elsewhere, speeches from Dallas Fed President Lorie Logan and Board of Governors member Philip Jefferson will be watched for any clues as to the future path of interest rates.
The speeches come as the Fed prepares for the latest data on inflation with consumer price and wholesale price data this week.
Minutes from September’s FOMC meeting will also be published on Wednesday.
Meanwhile, the reporting season kicks off later in the week with banking results from JPMorgan, Citigroup and Wells Fargo due on Friday.