Highlights
Equities sold off sharply late Thursday amid risk-off sentiment spurred by worrisome Middle East headlines. The Dow Jones industrial average dropped 1.4 percent, the S&P 500 lost 1.2 percent, and the Nasdaq also fell 1.4 percent. US Treasury yields declined while oil prices and the dollar rose.
Equities reversed morning gains and oil prices spiked in the afternoon on news that Israel had stepped up its military readiness. Some observers expressed concern that Iran was preparing retaliation for an Israeli strike earlier this week against an Iranian official in Syria. The market also reacted to news that President Biden had called for a ceasefire in Gaza and warned Israel about its practices there.
Markets also appeared to react to comments from Minneapolis Fed President Neel Kashkari, who questioned whether the Fed would cut rates this year at all if inflation does not improve. Multiple other Fed officials made comments more in line with the view that inflation remains too high but it is declining and rate cuts remain likely later in the year.
Caution heading into monthly US employment figures due Friday morning played into the risk-off mood. Higher yields have gotten some of the blame for a weak start to the second quarter but yields declined Thursday as investors moved toward safe assets.
Among sectors, big technology shares had a weak day as did media, chip-makers, restaurant chains, insurance, and retail. Holding up best were banks, food, beauty stocks, and aerospace & defense.
Equities reversed morning gains and oil prices spiked in the afternoon on news that Israel had stepped up its military readiness. Some observers expressed concern that Iran was preparing retaliation for an Israeli strike earlier this week against an Iranian official in Syria. The market also reacted to news that President Biden had called for a ceasefire in Gaza and warned Israel about its practices there.
Markets also appeared to react to comments from Minneapolis Fed President Neel Kashkari, who questioned whether the Fed would cut rates this year at all if inflation does not improve. Multiple other Fed officials made comments more in line with the view that inflation remains too high but it is declining and rate cuts remain likely later in the year.
Caution heading into monthly US employment figures due Friday morning played into the risk-off mood. Higher yields have gotten some of the blame for a weak start to the second quarter but yields declined Thursday as investors moved toward safe assets.
Among sectors, big technology shares had a weak day as did media, chip-makers, restaurant chains, insurance, and retail. Holding up best were banks, food, beauty stocks, and aerospace & defense.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
