US Stocks Falter, Oil, Gold Rally As Israel-Hamas Conflict Escalates: What's Driving Markets Friday?

Risk aversion intensified during Friday’s morning trading, with stocks taking a sharp downturn while gold and oil rallied in the wake of heightened tensions in the Middle East.

Israel has ordered the evacuation of more than 1 million people from North Gaza to the southern part of the Gaza Strip as the military prepares to besiege the city. Tensions are rising on the northern front, with clashes between Hezbollah and Israeli forces along the Israeli-Lebanese border.

On the data front, the University of Michigan Consumer Sentiment index experienced a concerning decline in October, accompanied by an unexpected increase in inflation expectations.

Banks reported third-quarter earnings that exceeded expectations Friday; stock reactions were subdued due to deteriorating overall risk sentiment.

Gold and oil emerged as top-performing assets on Friday, capitalizing on the increasing geopolitical risks in the Middle East. The VanEck Gold Miners ETF GDX rose 4.6% on the session, the largest daily jump since July.

The CBOE Volatility Index, or VIX, a key fear gauge on the market, rose over 22% on its strongest day in 2023.

Cues From Friday’s Trading:

The S&P 500 fell 0.6%, while the tech-heavy Nasdaq 100 had the sharpest drop of 1.2%.

Blue-chip stocks in the Dow Jones Industrial Average held steady, while small caps in the Russell 2000 fell 0.9%.

US Index Performance On Friday

Thursday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.6% lower to $430.98.
• The SPDR Dow Jones Industrial Average ETF DIA held flat at $336.20.
• The Invesco QQQ Trust QQQ fell 0.4% to $357, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• The Energy Select Sector SPDR Fund XLE was the outperformer for the second day in a row, up 2.3% today.
• The Technology Select Sector SPDR Fund XLK was the laggard, down 1.5%.

Stocks In Focus:

• JP Morgan Chase & Co. JPM rose 1.6% on a strong third-quarter earnings report and improved guidance.
• Other financial stocks reacting to earnings are Citigroup, Inc. C, up 0.5%, BlackRock, Inc. BLK, down 1.7%, PNC Financial Services Group, Inc. PNC, down 4% and Progressive Corp. PGR, up 7.5%.
• Dollar General Corp. DG rallied about 13% after it brought back its previous CEO Todd Vasos to helm the company. The company reduced the low end of its full-year earnings per share guidance.
• Microsoft Corp. MSFT fell 1.4% after the U.K. watchdog gave the green light for the acquisition of Activision Blizzard, Inc. ATVI
• ConocoPhillips COP, Exxon Mobil Corp. XOM rose over 3% as oil prices surged.
• AMC Entertainment Holdings Inc. AMC fell nearly 12%, despite a lack of company-related news, snapping a five-day winning streak.

Commodities, Bonds, Other Global Equity Markets:

Crude oil rallied 4%, with a barrel of WTI-grade crude trading at $85.88. The United States Oil Fund ETF USO was 4.1% higher to $78.52.  

Treasury yields were lower, with the 10-year yield up down 7 basis points to 4.63% and the 30-year yield up by 7 basis points to 4.79%. The iShares 20+ Year Treasury Bond ETF TLT was 1.5% higher for the day. 

The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.3% lower to 1.0504.

European equity indices had a negative session. The SPDR DJ Euro STOXX 50 ETF  FEZ fell 1.7%. 

Gold rocketed 3.2% to $1,928/oz, while silver rallied 4% to $22.69. Bitcoin BTC/USD was flat at $26,736.

Staff writer Piero Cingari updated this report midday Friday. 

Photo via Shutterstock.