Wall Street Weakens Ahead of Weekend, Oil Rally Again Weighs on Sentiment
US stocks weakened on Friday morning as oil prices rebounded after a brief decline, keeping the market cautious amid the ongoing Iran conflict. The Dow Jones Industrial Average fell 0.1%, the S&P 500 fell 0.4%, and the Nasdaq Composite dropped 0.7%, reflecting renewed pressure as energy prices strengthen and inflation concerns persist.
Oil prices rose again as the main driver. Brent crude rose 1.7% to US$110.50 per barrel, while WTI rose 0.7% to US$96.78. A day earlier, stocks briefly pared losses after Israeli Prime Minister Benjamin Netanyahu said Israel was assisting the US “in intelligence and other ways” to open the Strait of Hormuz, and claimed Iran had lost its ability to enrich uranium and produce ballistic missiles, raising hopes for a quicker end to the conflict.
However, WTI remains up more than 48% so far this month, indicating that the energy risk premium has not disappeared. Deutsche Bank noted that Friday marked the 15th trading day since the conflict began—historically the average point when US equities bottom after geopolitical shocks—although the bank emphasized that in the current situation, headlines remain more important than historical patterns.
Market volatility also has the potential to increase due to the quadruple witching event, which is the quarterly expiration of stock options, index options, index futures, and individual stock futures. This event often drives higher volume and sharper intraday movements as investors rebalance or close derivative positions.
Despite the session, the major indexes were still heading for their fourth consecutive losing week. Heading into Friday, the S&P 500 and Dow were down 0.4% and 1.2% for the week, respectively, while the Nasdaq was down 0.1%. The Dow and Nasdaq were also approaching correction territory, each about 8% from their record closes, while the S&P 500 remained about 5% below its peak.
Some market participants believe that short-term direction depends heavily on whether the Strait of Hormuz can be reopened. The Wells Fargo Investment Institute called the opening of the straits key to market movements and predicted the process could occur in a matter of weeks, not months. On the other hand, some believe the equity market remains overly optimistic about the impact of the war on profits and the economy, as the energy surge has the potential to erode household purchasing power and restrain growth.
Source: Newsmaker.id
