US stocks ended the day sharply lower Friday as Wall Street worried about escalating tension in the Middle East and traders rushed to safe havens like bonds and gold.
The Dow fell 475 points, or 1.2%, after dropping more than 500 points at the day’s lows. The S&P 500 declined 1.5% and the Nasdaq Composite lost 1.6%. All three major indexes ended the week lower.
The US and Israel are on alert for a potential attack by Iran or its proxies, the White House said Friday, after an Israeli strike in Damascus last week.
Oil prices spiked on Friday on fears of intensifying regional tensions stoked by the war in Gaza. Brent crude futures, the international benchmark for oil, settled at $90.45 a barrel, retreating after touching its highest level since October. West Texas Intermediate crude futures, the US benchmark, climbed to $85.66 a barrel.
Growing tensions in the Middle East and the impact it could have on oil prices is “a wild card” in two ways, Chicago Federal Reserve President Austan Goolsbee said in a Fox Business interview on Friday.
One concern he has is how it will impact overall headline inflation if prices spike. The other concern is how it could raise production costs across the economy given gas prices are a major input. That would be “a negative supply shock,” which he said could lead “to a more stagflationary environment,” where prices rise but the economy stalls.
“We’re going to have to definitely keep an eye on commodity prices,” added Goolsbee, who is not voting on interest rate decisions this year.
Investors rushed to haven investments Friday as geopolitical concerns and spiking oil prices rattled Wall Street. Gold futures rose to settle at $2,356.20 troy ounce, retreating from a new record high hit earlier in the day.
Treasury yields declined as traders sought out bonds. The iShares Core US Aggregate Bond exchange-traded fund, which tracks the performance of US investment-grade bonds, rose 0.3%.
CNN’s Fear & Greed Index, which measures seven barometers of market sentiment, closed at a “neutral” reading, pulling back from a “greed” reading the prior close.
Bank earnings add to market jitters
Investors also focused on the start of the first-quarter earnings season.
JPMorgan Chase CEO Jamie Dimon warned investors Friday that while strong economic data is reassuring, geopolitical turmoil and persistent inflation are key causes of concern. He also cited Russia’s war with Ukraine as an ongoing concern.
“It could be determinative on what happens to the global economy if oil and gas prices go too high,” Dimon told reporters after the bank’s first-quarter results released Friday morning.
JPMorgan Chase shares fell 6.5% Friday.
The concerns about geopolitical turmoil come at an already trying time for investors, who are contending with worries that persistent inflation could lead the Federal Reserve to cut interest rates later than expected after raising them to a 23-year high. Some Fed officials have even said that rate hikes aren’t off the table, though it’s unlikely, if the central bank’s progress on inflation stalls.
Elsewhere, fresh data showed that Americans’ attitudes toward the economy have dampened over the past few months as inflation stays stubborn. The University of Michigan’s latest consumer survey showed that sentiment largely held steady in April, according to a preliminary reading released Friday.
As stocks settle after the trading day, levels might change slightly.
CNN’s Elisabeth Buchwald contributed reporting.
