The U.S. stock market declined on Friday because of escalating tensions between Israel and Iran which caused investors to move away from risky assets. The Israeli military conducted strikes against Iranian nuclear facilities which created widespread concerns about extended instability throughout the oil-producing area. Iran vowed a strong response.
The S&P 500 index declined by 1% while the Dow experienced a decline exceeding 650 points and the Nasdaq dropped 1.2%. The oil price surge reached 7% which boosted energy company stocks including ExxonMobil which increased 1.7%. The airline industry experienced significant declines because of rising fuel expenses which caused Delta and United and American Airlines to drop more than 3% each.
Defense contractors experienced market gains because Lockheed Martin, RTX and Northrop Grumman increased their stock prices by 2% to 3%. According to Comerica Wealth Management CIO Eric Teal geopolitical risk has intensified domestic uncertainty.
The President denied U.S. participation in the operation but stated Iran had triggered the strike through its refusal to accept American nuclear requirements. He announced additional “brutal” military actions against Iran while suggesting more pressure would be applied to Tehran.
The escalating conflict introduced market volatility while creating worries about crude supply disruptions that could worsen if the situation spreads across the region.
