Wall Street ends lower as Iran war fuels inflation fears
U.S. stocks fell on Friday and posted weekly losses as the war in Iran disrupted oil supplies. Investors also weighed a sharp downward revision to GDP growth.
Equities in the United States ended lower on Friday, concluding a week defined by intense volatility in energy markets and growing concerns over global supply chains. All three major indexes recorded daily and weekly losses as the market reacted to the escalating conflict involving Iran.
Crude oil prices fluctuated throughout the session before settling higher. Brent Crude Oil climbed 2.67% to $103.14, marking its first settlement above $100 per barrel in over eighteen months. This surge persisted despite efforts to stabilize the market, including a temporary easing of sanctions on Russia to alleviate supply pressures. Paul Nolte, senior wealth advisor at Murphy & Sylvest, highlighted the unusual nature of the current market environment.
"Weve seen volatility in the energy market that rivals any two-week period in cryptocurrency history."
Geopolitical tensions have intensified as reports suggest the conflict has expanded to include Lebanon, Kuwait, Iraq, the United Arab Emirates, Bahrain, and Oman. The situation has led to increased concerns regarding the Strait of Hormuz, which serves as a vital artery for approximately 20% of the world's oil supply. On Thursday, the International Energy Agency warned that the ongoing war could cause the largest disruption in global crude supply ever recorded.
Economic data released on Friday further dampened investor spirits. The Commerce Department slashed its estimate for fourth-quarter GDP growth to 0.7%, down from previous projections. While the Personal Consumption Expenditures report indicated that inflation remains a persistent challenge, demand for durable goods appeared to be softening. Peter Cardillo, chief market economist at Spartan Capital Securities, noted the implications for monetary policy.
"Inflation remains elevated, and with the possibility of energy prices eventually moving into the pipeline, the Fed is likely to stay on hold for a longer period of time."
In corporate news, Adobe Inc. shares declined following the announcement that its longtime chief executive will depart once a successor is named. Additionally, Meta Platforms, Inc. saw its stock price fall after reports indicated a delay in the release of its Avocado artificial intelligence model until at least May.
By the close of trading, the S&P 500 had lost 40.27 points, or 0.60%, to end at 6,632.35. The Nasdaq Composite dropped 208.28 points, or 0.93%, to 22,103.70, and the Dow Jones Industrial Average fell 117.01 points, or 0.25%, to 46,560.84.
