US benchmark equity indexes experienced a downturn ahead of Monday's close, signaling investor caution as oil prices climbed significantly amidst ongoing geopolitical tensions in the Middle East. The Nasdaq Composite index experienced a decline of 1.2%, landing at 17,913.1. Similarly, the Dow Jones Industrial Average and the S&P 500 both fell by 1.1%, finishing their sessions at 41,906.9 and 5,690.4, respectively.
Among various market sectors, utilities and consumer discretionary categories faced the most significant losses, while the energy sector emerged as a rare winner during this period of market instability. In the commodities sphere, West Texas Intermediate crude oil rose by 3.9% to reach $77.31 a barrel, while Brent crude oil prices surpassed the $81 mark.
This increase is attributed to heightened fears surrounding a potential escalation of conflict in the Middle East, which could lead to significant disruptions in oil exports from this crucial region, as noted by D.A. Davidson in a recent client advisory. In parallel to the movement in equity indexes, the US two-year Treasury yield witnessed an uptick of 6.7 basis points, adjusting to 4%.
Meanwhile, the yield on the 10-year Treasury note increased by 4.5 basis points, reaching 4.03%, indicating a shifting sentiment among fixed-income investors as they react to the evolving financial landscape. Market participants continue to closely monitor geopolitical developments, particularly in oil-producing areas, as these factors heavily influence both equity markets and commodity prices, affecting the broader economic outlook..