4:10 p.m. ET: Stocks end session lower; Dow plunges 233 points
Stocks sank across the board Friday, while oil and gold prices surged after a U.S. drone attack killed a top Iranian general. The Dow tumbled more than 230 points. Both the Dow and S&P 500 had their worst day in a month.
Here’s how the markets settled at the end of regular trading Friday:
- S&P 500 (^GSPC): 3,234.85, down 23 points or 0.71%
- Dow (^DJI): 28,634.88, down 233.92 points or 0.81%
- Nasdaq (^IXIC): 9,020.77, down 71.42 points or 0.79%
- Crude oil (CL=F): $62.98 per barrel, up or 2.94%
- Gold (GC=F): $1,551.50 per ounce, up $23.40 or 1.53%
3:40 p.m. ET: Eurasia: Escalation a ‘base case’ that will send oil prices higher
The reverberations of the U.S. assassinating Iranian General Qassem Soleimani will ricochet across the already turbulent Middle East, according to risk analysis firm Eurasia Group. In a research note, practice head Ayham Kamel warned of “a long cycle of regional escalation with significant risks to US assets and Mideast energy infrastructure that nevertheless stop short of war.”
Eurasia estimates a 55% probability of the conflict escalating, and projects oil rallying to a new range of $65-75 per barrel. On Friday, crude closed just shy of $63.
3:20 p.m. ET: Trump says US not seeking war, regime change in Iran
President Donald Trump, addressing the public after the strike that killed a top Iranian general, said that America is not seeking to overthrow the regime — but that the airstrike was necessary to “stop a war” as thousands of additional U.S. troops head to the region.
In his televised address, the president argued that Soleimani had a “sick passion” that resulted in the deaths of innocents. Stocks hugged their ranges with less than an hour to the closing bell.
2:50 p.m. ET: Crude soars amid Iran jitters
Geopolitical fears spurred big gains in crude (CL=F), which surged by nearly 3% on the day to close just shy of $63 per barrel — the highest since last spring, according to Bloomberg data. Global oil markets are well lubricated, but the big fear is that ratcheting tensions could cause a new spike above the psychologically-important $100 level.
2:00 p.m. ET: FOMC Minutes: Fed comfortable with rates, but see risks
With geopolitical tensions boiling, the minutes of the Fed’s last meeting fail to inspire a market that’s already heavy. During the December 10-11 meeting, Fed officials stated rates were “appropriate” even as other factors (hello, Iran) muddy the waters:
“Participants regarded the current stance of monetary policy as likely to remain appropriate” as long as incoming reports affirmed their outlook, minutes of the Dec. 10-11 Federal Open Market Committee released Friday in Washington showed. “Nevertheless, global developments, related to both persistent uncertainty regarding international trade and weakness in economic growth abroad, continued to pose some risks to the outlook.”
Stocks remain mired in the red, but are off the session’s lows.
12:20 p.m. ET: Knee-jerk selling gives way to bargain hunting
Wall Street’s benchmarks have clawed back off the session’s deepest troughs at midday. Iran is still a big overhang for the market, but investors appear to be scooping up shares on the (relative) cheap after blue chips and equity stocks were down over 1% earlier.
Here were the main market moves as of 12:20 p.m.:
- S&P 500 (^GSPC): down 14.88 points or 0.46%
- Dow (^DJI): down 183.37 points or 0.64%
- Nasdaq (^IXIC): down 40.93 points or 0.45%
- Crude oil (CL=F): $62.59 per barrel, up or 2.3%
- Gold (GC=F): $1,550.50 per ounce, up $21.10 or 1.47%
11:40 a.m. ET: GOP Congressman: China is a bigger threat than Iran
The bigger threat to the U.S. economy is still China — even after a surprise airstrike in Iraq by the Trump administration that killed a prominent Iranian general, Rep. Mike Gallagher (R-WI) said in an interview on Yahoo Finance’s ‘The First Trade:’
“I would take a longer-term focus. I don’t know over the next year what would be the most short-term impact [China trade war or aftermath of airstrike]. But the biggest economic threat we face undoubtedly is from China.”
“I am particularly concerned about the Chinese Communist party’s ability to dominate the future of the internet, which is basically the future of the economy. If they make further inroads into 5G — and get some of our allies to go along with their architecture for 5G — we will be in a very dangerous position in a few years from now. We simply cannot allow that to happen.”
10:30 a.m. ET: Despite Iran jitters, ‘the bull market has not changed’
Fallout from the Iran strike has investors rattled. The knee-jerk selling of risk-sensitive assets aside, the fundamentals underpinning the market haven’t changed — at least not yet, according to CIBC Private Wealth Management’s CIO David Donabedian:
“The equities market has been so consistently strong, eventually something was going to happen to knock it off its pins. While uncertainty can come from many different directions in the course of a year, this geopolitical surprise does not change the current fundamentals driving the market today – the health of the economy, rate of inflation, monetary policy and corporate earnings,”
The investor added that 2020 begins with an economy “in pretty good shape,” a Federal Reserve that’s still committed to low rates and U.S.-China trade negotiations that remain on track:
“Iran does usually retaliate so the current situation brings rising uncertainty. But our view about this being a bull market has not changed,” says Donabedian. “Iran is something that must be watched, but investors should not overreact.”
10:00 a.m. ET: Manufacturing hits the skids in December
As if investors needed any more reasons to run for the hills on Friday, the ISM Manufacturing Index tumbled to 47.2 last month, its worst showing since June 2009. The figure was worse than expected, and below the 50 benchmark considered contractionary.
In fact, December was the 5th straight month of contraction, the ISM noted. But not all the news was bad:
“Global trade remains the most significant cross-industry issue, but there are signs that several industry sectors will improve as a result of the phase-one trade agreement between the U.S. and China. Among the six big industry sectors, Food, Beverage & Tobacco Products remains the strongest, while Transportation Equipment is the weakest. Overall, sentiment this month is marginally positive regarding near-term growth,” ISM Chair Timothy R. Fiore noted.
9:30 a.m. ET: Stocks tumble at open on geopolitical turmoil in Middle East
Stocks slid at the open as geopolitical tensions ratcheted up in the Middle East following a U.S. drone airstrike killed a top Iranian general.
Here were the main market moves, as of the market open:
- S&P 500 (^GSPC): 3,224.10, down 33.75 points or 1.04%
- Dow (^DJI): 28,547.39, down 321.41 points or 1.11%
- Nasdaq (^IXIC): 8,985.45, down 106.74 points or 1.17%
- Crude oil (CL=F): $63.35 per barrel, up $2.16 or 3.53%
- Gold (GC=F): $1,549.20 per ounce, up $21.10 or 1.38%
Geopolitical escalation and conflict is expected in the region. For investors, however, the main question remains how a war between the U.S. and Iran would impact markets.
“Gold’s a winner as tension increases, and oil prices are higher too,” Societe Generale’s Kit Juckes wrote on Friday morning. “Bond yields are lower, the equity rally which was underway in the U.S. has stalled but not gone dramatically until reverse, and in the FX market, safe havens and oil-sensitive currencies benefit but it’s the yen which is the clear winner.”
Tensions have been ratcheting up between the U.S. and Iran for some time, but the killing of Iranian Major General Qassem Soleimani is being seen as the main catalyst for a potential war between the two nations. The attack was met with strong words of “forceful revenge” from Iran’s supreme leader.
“Iran must respond. This is potentially the most destabilizing event in the region since [the U.S.] invaded Iraq,” Academy Securities wrote in a note Friday. “Shia Mobilization forces will undermine the Iraqi government by targeting U.S. forces and Iraq’s government won’t be able to control the chaos. It has changed the narrative in Iraq from a weak government – recent protests at the U.S. Embassy – to ‘down with America’ and a violation of sovereignty.”
8 a.m. ET: Stock futures sink; Oil and gold surge
U.S. stock futures sank across the board and oil and gold prices surged Friday after the U.S. launched an airstrike killing a top Iranian general.
Here were the main pre-market moves, as of 8 a.m. ET:
- S&P futures (ES=F): 3,223.25, down 35.75 points or 1.10%
- Dow futures (YM=F): 28,564, down 277 points or 0.96%
- Nasdaq futures (NQ=F): 8,774.25, down 117.50 points or 1.32%
- Crude oil (CL=F): $63.44 per barrel, up $2.26 or 3.69%
- Gold (GC=F): $1,549 per ounce, up $20.90 or 1.37%
The U.S. confirmed that Iranian Major General Qassem Soleimani was killed near Baghdad Airport Friday by an American drone strike ordered by President Donald Trump. “This strike was aimed at deterring future Iranian attack plans. The United States will continue to take all necessary action to protect our people and our interests wherever they are around the world,” according to the statement.
The 62-year-old was a top Iranian commander and directed the wars in Syria, Iraq, Lebanon and Yemen, and Iran’s supreme leader vowed ‘forceful revenge’ following the attack.
The geopolitical turmoil sent oil prices spiking with crude up nearly 4% on the news. “Higher oil prices represent a tax on oil consumers and a windfall for producers,” Pantheon Macro wrote in a note Friday. “World oil consumption is about 100M barrels per day, so each five dollars on the prices is equivalent to an annualized tax of about $183B per year, or 0.1% of global GDP.”
Gold prices also got a boost, as investors flocked to safe-haven assets. “Gold’s a winner as tension increases, and oil prices are higher too,” Societe Generale said in a note Friday. “Bond yields are lower, the equity rally which was underway in the US has stalled but not gone dramatically until reverse, and in the FX market, safe havens and oil-sensitive currencies benefit but it’s the yen which is the clear winner.”