U.S. stocks fell as Treasury yields rose to multi-year records following hawkish remarks from Federal Reserve Chairman Jerome Powell and investor concerns about escalating conflict in the Middle East.
The Dow Jones Industrial Average was down 34 points, or 0.1%, the S&P 500 was down 0.1% and the NASDAQ Composite was down 0.2%.
The major indexes on Wall Street fell sharply on Thursday after the yield on the 10-year Treasury note reached 5%, its highest level since the 2007 financial crisis.
This came after a speech by Powell, who indicated that signs of growth being above trend or the labor market being too strong could be grounds for further tightening of monetary policy. He also mentioned emerging risks and the need to tread carefully, but investors have become very wary that rates could remain high for a long time.
The Dow fell 250 points, or 0.8%, on Thursday, while the benchmark S&P fell 0.9% and the tech-heavy Nasdaq fell 1%.
The major average indices also suffered losses over the week. By Thursday’s close, the S&P was down 1.2%, the Nasdaq was down 1.7% and the Dow was down nearly 0.8%.
Israel continues to shell the Gaza Strip in preparation for a ground invasion of the region following the Hamas attacks on Israel on October 7.
US President Joe Biden, in a televised speech, asked Americans to spend billions more dollars to help Israel fight Hamas, as well as to support Ukraine.
Concerns remain that the Middle East conflict could spread further into the volatile region, especially after the Pentagon said US troops intercepted three cruise missiles and several drones launched by the Houthi movement in Yemen. The Houthis, like Hamas and Hezbollah, are supported by Iran.
The sale continues on Friday. Financial giant American Express beat earnings expectations and reaffirmed its 2023 guidance. The company’s shares fell 1.9%.
SolarEdge Technologies shares fell 30% after the renewable energy company cut its revenue guidance for the fourth quarter.
Knight-Swift Transportation shares rose more than 11.8% after the trucking giant beat estimates in the third quarter on both the top and bottom lines.
Otherwise, the economic data calendar is largely empty on Friday, although speeches from Fed officials Loretta Mester and Patrick Harker will attract attention after Powell’s speech and as the central bank’s next monetary policy meeting approaches.
Crude oil prices rose on Friday amid news that the Biden administration plans to begin replenishing strategic oil reserves.
Both crude oil contracts posted positive gains for the second week in a row and are expected to rise between 1.5% and 2.2% as the conflict between Israel and Hamas raised fears that supplies to the key oil-rich region could be disrupted.
The market also received support after the US Department of Energy announced two separate oil purchase offers totaling 6 million barrels on Thursday, and President Biden renewed an attempt to replenish the severely depleted Strategic Petroleum Reserve.
The government has pulled about 200 million barrels from the NPR since the start of 2022, bringing the reserve to its lowest level in nearly 40 years, in an attempt to combat high gasoline prices since the Russian-Ukrainian conflict began.
