Stocks fell for the second straight week on Friday as tensions in the Middle East heightened investor caution and heightened concerns about a prolonged period of inflation that had rebounded earlier in the week.
The S&P 500 fell 1.5% on Friday, its worst trading day since January, and ended the week down 1.6%, its biggest weekly decline this year.
Other major indexes, including the Nasdaq Composite Index and the Russell 2000, also fell on Friday. The Vix Volatility Index, a gauge of investors' expectations for market movements over the next 30 days, known on the trading floor as Wall Street's “fear gauge,” rose.
This week's decline began after Wednesday's inflation report showed an unexpectedly stubborn rise in consumer prices, and as central banks seek to keep further brakes on the economy and the Federal Reserve. This casts doubt on the possibility of rate cuts in the near future. Slow down the pace of price increases.
This year's rally, which has seen the S&P 500 index rise to record levels, has been driven in part by investors betting on lower interest rates by the end of 2024. Futures market traders have scaled back activity since Wednesday's inflation report. Those bets.
Investors also sought to protect their investment portfolios, with U.S. and Iranian officials warning on Friday that Iran would move to Israel within days in retaliation for Israel's killing of several Iranian military commanders in Damascus, Syria. warned that there was a high possibility of launching an attack on
Several countries, including the United States, have issued new travel guidelines for Israel and surrounding areas. Stock investors say they have largely weathered this year's crisis, but the risk of further conflagration fueled some trading on Friday.
“As investors seek protection while markets are closed, there is a strong market for hedging exposure to possible events in the Middle East over the weekend,” said Robert Knopp, co-head of the S&P options desk at Optiver in Chicago. There is a lot of interest,” he said.
The yield on the 10-year Treasury note, which is inversely proportional to prices, fell 0.07 percentage points to 4.5% as concerns fueled demand for safe-haven assets.
The cloudy outlook was also offset by better-than-expected results from some of the nation's biggest banks, with JPMorgan warning of slower growth for the rest of the year. The bank's stock price fell 6.5% on Friday.
