Stocks dropped worldwide and bonds and gold prices rose due to concerns about the Israel-Hamas conflict escalating into a broader Middle East conflict. The S&P 500 experienced its worst week in a month, breaching the 200-day moving average, which chartists see as a bearish signal. The fear gauge, or VIX, on Wall Street reached its highest level since March. US airline shares had their longest weekly decline in over two years as carriers adjusted their forecasts in response to increased oil prices and wages. Traders sought safer investments amid geopolitical developments, causing Treasury yields to decrease and gold prices to approach $2,000 per ounce.
The crisis in the Middle East, as well as rising Treasury yields and concerns about interest rates staying high for a longer time, have contributed to market volatility in recent weeks. Despite individual companies reporting quarterly earnings, market movements have been largely influenced by global events rather than corporate results. The S&P 500 constituents have increasingly moved in the same direction due to these broader market forces. Additionally, futures contracts tied to the Cboe Volatility Index (VIX) closed in backwardation, indicating mounting distress and expected near-term volatility.
In terms of corporate highlights, American Express saw lower-than-expected card volumes in the third quarter due to decreased spending by small businesses and corporations. Regions Financial Corp. warned that it expected further declines in net interest income as higher interest rates continued to impact the bank. The United Auto Workers President stated that the union had received improved offers from Detroit’s three carmakers, but negotiations were ongoing.
