Stock Markets Wrap Up: U.S. stocks wrapped up a tumultuous week on a grim note, with a sharp decline fueled by mounting concerns over potential interest rate hikes and the escalating Israel-Hamas conflict.
Both the S&P 500 and Nasdaq suffered losses exceeding 1%, painting a somber picture. It was a comprehensive market retreat, with all 11 sectors of the S&P 500 in the red. Notably, the technology and financial sectors bore the brunt of the decline.
As the Israel-Hamas conflict intensified, Israel made a significant move by targeting a northern Gaza district. The latest chapter of this conflict, which began with Hamas militant attacks on October 7th, continues to raise geopolitical tensions.
Investors, wary of the weekend’s potential developments, adopted a cautious approach and started pulling their investments off the table. Alan Lancz, President of Alan B. Lancz & Associates Inc, an investment advisory firm based in Toledo, Ohio, acknowledged the heightened geopolitical risks influencing market sentiment.
Within the S&P 500, the financial sector took a 1.6% hit, while the KBW regional banking index experienced a more severe 3.5% drop. Among the casualties, Regions Financial saw its shares plummet by 12.4% following a profit report that failed to meet analysts’ expectations. The outlook for this sector remains uncertain, especially in the face of rising interest rates. The fear of missing a ‘soft landing’ looms large.
Good news: The 10-year Treasury yield fell slightly on Friday after surpassing 5% for the first time since July 2007. Federal Reserve Chair Jerome Powell’s comments on the U.S. economy’s strength and tight job market possibly requiring stiffer borrowing conditions to manage inflation sparked this increase.
The Dow Jones Industrial Average fell 286.89 points, or 0.86%, to 33,127.28. The S&P 500 fell 53.84 points, or 1.26%, to 4,224.16. The Nasdaq Composite fell the most, down 202.37 points, or 1.53%, to 12,983.81. The Dow fell 1.6% during the week, while the S&P 500 and Nasdaq fell 2.4% and 3.2%, respectively.
Also Read: Global Stock Markets Slow Amid Rising Bond Yields and Economic Concerns
The Cboe Volatility Index (VIX) reached its highest level since March 24, adding to market jitters.
SolarEdge experienced a dramatic fall of 27.3% following its warning of significantly reduced revenue in the upcoming fourth quarter.
Even though American Express exceeded third-quarter profit expectations, its shares fell by 5.4%. This mixed reaction underlines the ongoing uncertainties in the markets.
The third quarter of the U.S. earnings season is well underway, with 86 companies from the S&P 500 having reported their results. Some mid-sized banks have raised concerns about the fading impact of the Federal Reserve’s interest rate hikes on the sector.
In terms of trading volume, U.S. exchanges saw 11.05 billion shares traded, slightly surpassing the 10.58 billion average for a full session over the past 20 trading days.
The NYSE showed a significant imbalance, with declining issues outnumbering advancers at a ratio of 2.63-to-1. Meanwhile, the Nasdaq experienced a similar trend, with a ratio of 2.28-to-1 favoring decliners.
The S&P 500 had no new 52-week highs to celebrate, while it recorded a gloomy 38 new lows. On the other hand, the Nasdaq Composite managed to notch up nine new highs but also suffered a significant 420 new lows.
The week ended on a cautious and worrisome note, with multiple factors contributing to the market’s unease. Investors are bracing for what the upcoming days may bring, with a sense of uncertainty lingering in the air.
Our Reader’s Queries
Will 2024 be a good year for the stock market?
According to Tom Lee, an expert at investment research firm Fundstrat, the S&P 500 (SNPINDEX: ^GSPC) index is expected to increase by 9% in 2024, reaching 5,200. Lee also predicts a greater than 50% chance of the index experiencing double-digit growth this year. Additionally, he notes the possibility of a 30% jump in the index.
Should I pull out money from stock market?
Investing in the market for a longer period of time is crucial. Companies offer dividends as a way to appreciate their shareholders for holding onto their investments. If you’re investing in companies that pay dividends, it’s not wise to withdraw your money due to market fluctuations. Doing so would be detrimental to your investment strategy.
What are the markets doing right now?
The US markets are showing positive signs with NASDAQ at 14,524.07 (+0.09%) and S&P 500 at 4,697.24 (+0.18%). Gold is also up at 2,052.6 (+0.13%) while oil is showing a significant increase at 73.95 (+2.44%). These numbers indicate a promising trend for investors and traders alike.
A drop in the stock market can happen due to a major catastrophe, an economic downturn, or the collapse of a speculative bubble. Additionally, public fear can trigger a chain reaction of panic selling, leading to further price drops. It’s important to keep a level head during these times and not let emotions drive investment decisions.