U.S./Israel-Iran War: the Middle East On Edge
NextFin News - U.S. stocks fell Friday as a surge in oil prices turned the prior session’s tech sell-off into a broader decline. The Dow dropped 1.23%, giving up much of its relative strength, while the S&P 500 lost 0.52% and the Nasdaq slipped 0.21%. Brent crude rose 3.1% to settle at $116.72, its highest close since April, on fears that the U.S.-Iran conflict will flare up again and after Houthi attacks on Saudi oil sites. The session’s central tension was inflation: higher energy prices threaten the Fed’s path just days before its policy decision. Nearly three of every four S&P 500 stocks fell at one point in the session.
The Dow Jones Industrial Average fell 1.23%
The S&P 500 Index fell 0.52%
The Nasdaq Composite declined 0.21%
Stock & Sector Performance
The Dow closed at 52,215.16, down 652.82 points, the S&P 500 at 7,623.68 and the Nasdaq at 25,955.34. Oil’s rise pressured most sectors, and cybersecurity and software were the exception. Palo Alto Networks gained about 7.2% and Cloudflare about 7.4%, while Okta and CrowdStrike each rose around 6% as the group extended its recent rally. Deutsche Bank said cybersecurity firms may benefit from rising AI token usage.
For the week, the S&P 500 lost 0.5% and the Nasdaq shed 0.7%, their second straight weekly declines, while the Dow gained 0.4%.
Hot Sectors to Watch
Software and cybersecurity are showing early rotation signs inside technology. While semiconductors fell as much as 6.7% on Thursday, security software names jumped Friday, which suggests investors are separating AI hardware, where spending worries are concentrated, from software that could benefit from heavier AI use. It is too early to call that a confirmed trend, but the divergence is worth watching.
Energy is the other story. Brent’s climb from under $97 at the start of October to $116.72 is a confirmed trend, and the rise is now feeding into inflation expectations and the Fed outlook. The S&P 500 excluding AI-related names has also pulled ahead of the headline index this month, a sign that the market’s leadership is changing.
Major Story of the Day
Oil dominated, and the Fed is the next catalyst. Brent’s $116.72 settle is the highest since April, and the Iran war has severely cut global supply. Wall Street expects the Federal Reserve to hold rates steady at its meeting next week but is leaning heavily toward a rate hike in December. The Fed’s preferred inflation gauge, the PCE price index, is expected to show a 3.6% annual rate for September, well above the 2% target. A University of Michigan survey released Friday showed consumer sentiment at 48 for October, off just 0.1 point from September and better than the 46.3 consensus, though current conditions fell 8.3% on the month as inflation weighed on the outlook.
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