US benchmark equity indexes experienced a predominantly lower close on Thursday, reflecting growing geopolitical tensions in the Middle East as oil prices surged. As markets awaited the official jobs report for September, key indices showed varying performance. The Dow Jones Industrial Average declined 0.4% to 42,011.6, while the S&P 500 fell by 0.2% to 5,699.9.
The Nasdaq Composite remained relatively unchanged at 17,918.5. Among the sectors, consumer discretionary suffered the most significant decline, whilst energy stocks led the way in gains. In the commodity market, West Texas Intermediate crude oil experienced a substantial increase, soaring 5.4% to $73.91 per barrel.
Recent Israeli airstrikes aimed at Hezbollah's intelligence headquarters in Beirut added to the escalating tensions, heightening the market's focus on potential disruptions in oil supply. Iran's recent missile attack on Israel, reportedly a retaliation for the killing of Hezbollah chief Hassan Nasrallah and an Iranian commander in Lebanon, has raised concerns.
Analysts at ING warned that Israeli actions targeting Iran's oil facilities could further exacerbate oil prices “significantly higher” depending on the severity of any retaliatory measures. When questioned by reporters regarding U.S. support for potential Israeli strikes against Iranian oil facilities, President Joe Biden stated, "we're in discussion of that," but added, "there's nothing going to happen today." The U.S.
economic landscape showed mixed signals Thursday; the two-year Treasury yield rose by 7.2 basis points to 3.71%, and the 10-year rate increased by 6.8 basis points to 3.85%. Anticipation grows for the Bureau of Labor Statistics’ report set to be released Friday, expected to indicate that the U.S. economy added 150,000 nonfarm jobs in September, an acceleration from the 142,000 gain reported for August, based on Bloomberg's compiled survey. In terms of unemployment trends, weekly applications for unemployment insurance rose more than expected, per government data released on Thursday.
However, a recent decrease in continuing claims suggests a “solid increase” for nonfarm payrolls, according to Jefferies. Additionally, job cuts reported by U.S.-based employers totaled 72,821 last month, down 4% from August and marking a 53% increase from September 2023, based on data from Challenger Gray & Christmas. The services sector displayed mixed signals for September.
The Institute for Supply Management reported that activities expanded more than anticipated, while S&P Global noted a deceleration in growth. Similarly, the manufacturing sector remained in contraction territory amidst weakened demand and rising unemployment, as highlighted by data from ISM and S&P Global. In corporate news, Constellation Brands reported its fiscal Q2 earnings surpassed market estimates, despite revenue falling short of Wall Street’s projections due to a $2.25 billion noncash goodwill impairment loss in its wine and spirits business.
Consequently, shares dropped by 4.7%, marking the steepest decline on the S&P 500. Tesla emerged as one of the poorer performers on both the S&P 500 and Nasdaq, declining by 3.4%. The electric vehicle maker's decision to remove its most affordable Model 3 sedan from its U.S. order page signals the impact of recent tariffs on Chinese imports, which analysts at Wedbush Securities described as a “double-edged sword” for U.S.
automakers. Conversely, Vistra shares rose significantly by 5.7%, positioning it among the top gainers on the S&P 500 following RBC’s increase in price target from $105 to $141 while maintaining an outperform rating. Furthermore, gold prices climbed 0.3% to $2,677.40 per troy ounce, and silver advanced 1.3% to $32.33 per ounce..