Stocks Suffer, Safe Havens Rise As Investors Fear Escalation In Middle East: What's Driving Markets Friday?

Risk sentiment remains extremely fragile as the week draws to a close, with the threat of an escalation in the Middle East intensifying. All major stock indices are trading in negative territory as of 1 p.m. in New York, extending their weekly losses.

Clashes persist between Israel and Hamas, while Israeli forces are engaged in conflict with Hezbollah on the northern border near Lebanon.

A meeting of global leaders is scheduled Saturday in Cairo, Egypt, to discuss the possibility of a ceasefire. Humanitarian aid remains awaiting clearance for entry into Gaza.

Investors flocked to safe haven assets, with gold and Treasurys rising.

Fed speakers delivered conflicting remarks. Philadelphia Fed President Patrick Harker hinted at his preference for a pause, while Cleveland Fed President Loretta Mester said she remains aligned with the Fed forecasts, eyeing one more increase.

Cues From Friday’s Trading:

The S&P 500 fell 0.6%, extending weekly declined to 1.9%. The Nasdaq 100 underperformed, down 0.8% for the session, and over 2% for the week. Blue chips limited the slump, with the Dow falling 0.3% Friday and slightly more than 1% for the week.

US Index Performance On Friday

Analyst Color:

Amid the gloom seen in recent sessions, an analyst highlighted two data points that offer a glimmer of hope. Carson Group Chief Market Strategist Ryan Detrick shared two graphics to suggest the worst may be behind us.

In the last 10 pre-election years, the S&P 500 index bottomed around Oct. 19, he said. The U.S. is set to hold its general election in November 2024 to elect a new president, with the incumbent Joe Biden and former President Donald Trump widely expected to lock horns, according to opinion polls.

Detrick also noted the third year of a new president’s term typically sees strength in the first half of the year, then choppiness into Thanksgiving before rallying strongly into the election year.

Friday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.6% lower to $424.17.
• The Invesco S&P 500 Equal Weight ETF RSP also fell 0.6% to $137.97.
• The SPDR Dow Jones Industrial Average ETF DIA declined 0.3% to $333.06. 
• The Invesco QQQ Trust QQQ fell 0.8% to $357.15, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• The Energy Select Sector SPDR Fund XLE was the underperformer, down 1.4%, followed by the Technology Select Sector SPDR Fund XLK, down 1.1%.
• The Consumer Staples Select Sector SPDR Fund XLP rose 0.2%, outperforming along with the Real Estate Select Sector SPDR Fund XLRE.

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Stocks In Focus:

• Knight-Swift Transportation Holdings Inc. KNX soared over 9% following the release of its quarterly results.
• Among the other stocks reacting to earnings are WD-40 Company WDFC (up 1%), CSX Corp. CSX (up by about 0.7%), Intuitive Surgical, Inc. ISRG (down about 3%), Regions Financial Corp. RF (down 12%), Schlumberger Limited SLB (down about 2%), American Express Company AXP (down about 3%), Comerica, Inc. CMA (down about 6%).
• SolarEdge Technologies, Inc. SEDG plunged over 25% after the company warned of a third-quarter shortfall, citing substantial unexpected cancellations and pushouts of existing backlog from European distributors. The company took down along with it the shares of its peer Sunrun Inc. RUN, Enphase Energy ENPH, among others.
• Hewlett Packard Enterprise Company HPE declined over 6% on a negative pre-announcement.

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 0.6%, with a barrel of WTI-grade crude trading at $88.50. The United States Oil Fund ETF USO was 0.7% lower to $81.16.  

Treasury yields were lower, with the 10-year yield down by 9 basis points to 4.9% and the 30-year yield down by 5 basis points to 5.06%. The iShares 20+ Year Treasury Bond ETF TLT was 0.9% higher for the day. 

The dollar slightly fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.1%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.1% higher to 1.06.

European equity indices were weaker, with the SPDR DJ Euro STOXX 50 ETF  FEZ down 0.7%. 

Gold, as tracked by the SPDR Gold Trust GLD, edged 0.6% up to $1,900/oz, while silver rose 1.7% to $23.41. Bitcoin BTC/USD rose 2.5% to $29,403.

Staff writer Piero Cingari updated this report midday Friday. 

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