Middle East Tensions Weigh On U.S. Market Sentiment, Major Averages Trend Lower

Barry Adams
16 Jan, 2024
New York City

U.S. stocks inched lower and Treasury yields advanced as investors reviewed the latest earnings reports after returning from a three-day holiday. 

The S&P 500 index and the Nasdaq Composite edged up fractions as investors debated future rate cuts and their timings and possibilities of another bout of inflation amid rising supply chain disruptions for shipments between Asia and Europe.

Houthi rebels stepped up their attacks on merchant ships for the second day in a row in the Red Sea, forcing shipments to be diverted away from the Suze Canal.

Investors also bid up Morgan Stanley and Goldman Sachs stocks after the financial services companies reported better-than-expected quarterly results.

In overseas trading, European markets turned lower after policymakers pushed back on the hopes of rate cuts in the near future.

Market indexes in London, Paris, and Frankfurt decreased more than 0.5%, and the euro dropped to a five-week low against the U.S. dollar.

In Asia, market indexes in Hong Kong dropped to a new 14-month low and extended the losses of the last four years, and the CSI 300 index edged down ahead of the release of the GDP and retail sales data.

 

U.S. Indexes and Yields

The S&P 500 index decreased 0.3% to 4,799.92, and the Nasdaq Composite fell 0.4% to 15,041.60.

The yield on 2-year Treasury notes decreased to 4.22%. 10-year Treasury notes held steady at 4.0%, and 30-year Treasury bonds edged up to 4.23%.

WTI crude oil increased $0.45 to $73.08 a barrel, and natural gas prices decreased 4 cents to $3.04 a thermal unit.

Gold decreased by $16.16 to $2,038.42 an ounce, and investors debated the future interest rate path.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.12.

 

U.S. Stock Movers

Goldman Sachs rose 1.1% to $382.04 after the financial services company reported better-than-expected quarterly results on the back of strong performance in the asset management group.

Morgan Stanley increased 0.8% to $90.40 after the financial services company reported quarterly results that topped market expectations and were supported by strength in its investment banking unit.