Wall Street Indexes Face Headwinds Amid Rising Prospects of a Wider War In Middle East

Barry Adams
02 Oct, 2024
New York City

Stock market indexes were under pressure amid rising tensions in the Middle East compounded by the uncertainty about the port workers strike. 

The S&P 500 index decreased 0.3% and the Nasdaq Composite declined 0.4% in Wednesday's trading, as fears rose about the prospect of a wider war in the Middle East. 

Iran said it completed its ballistic missile attack on Israel in retaliation of death of its political advisors to Hezbollah. 

Israel president Benjamin Netanyahu vowed to provide a "painful response" to Iran's missile attacks, which were thwarted with the help of the U.S. military installations in Jordan and Saudi Arabia.  

Israel also launched its ground offensive in southern Lebanon, targeting military hardware controlled by the Iran-backed Hezbollah. 

Investors are on edge as tensions escalate between Iran and Israel, which could possibly pull the U.S. in yet another war, while the U.S.-led NATO is enmeshed in challenging Russia's invasion of Ukraine. 

In addition, supply chain worries also dominated market sentiment after International Longshoremen's members launched a historic strike at key 14 ports on the East and Gulf Coasts. 

If the strike drags on longer than a week, retailers and businesses could face shortages and customers could experience higher prices.  

On the economic front, private payrolls rose 143,000 in September, higher than the revised increase of 103,000 in August, according to the monthly report by ADP. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.3% to 5,687.86, the Nasdaq Composite fell 0.2% to 17,867.55, and the Russell 2000 index fell 1.5% to 2,197.03. 

The yield on 2-year Treasury notes edged higher to 3.65%, 10-year Treasury notes inched up to 3.79%, and 30-year Treasury bonds inched higher to 4.14%.

WTI crude oil increased $2.07 to $71.87 a barrel, and natural gas prices edged up 8 cents to $2.98 a thermal unit.

Gold fell by $9.77 to $2,650.97 an ounce, and silver increased by $0.31 to $31.66.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 101.43.

 

U.S. Stock Movers

Nike Inc. declined 7.4% to $82.57, and the athletic footwear company reported better-than-expected revenue in its latest quarter. 

Revenue in the fiscal first quarter ending in August declined 10% to $11.6 billion from $12.9 billion, net income plunged 28% to $1.05 billion from $1.45 billion, and diluted earnings per share fell to 70 cents from 94 cents a year ago. 

The athletic footwear and apparel maker said inventories at the end of the quarter fell 5% to $8.3 billion, reflecting product mix shifts and lower input costs. 

In the fiscal first quarter, the company returned to shareholders about $1.8 billion, including $558 million of dividends and $1.2 billion of stock repurchases. 

The company also withdrew its annual outlook and postponed its investor day as the new chief executive prepares to take charge. 

China-linked stocks advanced for the sixth session in a row following the stimulus rally turned into a frenzy in Hong Kong. 

The Hang Seng index soared 6% and extended its six-day rally to a whopping 25%, ahead of the widely anticipated fiscal measures following monetary stimulus and the relaxing of curbs on residential property transactions. 

Property stocks in Hong Kong trading soared between 10% and 60%, and tech stocks jumped between 6% and 20%. 

In New York trading, Alibaba Group advanced 2.6% to $115.63, JD.com gained 8.6% to $46.65, Baidu increased 5.8% to $116.45, and PDD Holdings jumped 5.3% to $153.06. 

Tesla declined 4.4% to $246.85 after the electric vehicle maker reported slightly less-than-expected deliveries in the third quarter. 

The electric vehicle maker delivered 462,890 vehicles, higher than 435,059 in the quarter a year ago and 443,956 in the previous quarter. 

Tesla is facing growing competition from Chinese automakers, and electric vehicle industry sales in China surged more than 43% from a year ago to 1.03 million in September. 

Li Auto, BYD, and NIO reported record monthly sales in China in September. 

Eli Lilly increased 0.8% to $885.78, and the pharmaceutical company is planning to invest as much as $4.5 billion in research and manufacturing facilities in Indiana. 

The new facility will hire about 400 staff, when fully operational, of scientists, researchers, engineers, and clinical personnel. 

The company's latest investment plan is in addition to its previously announced $5.3 billion plan in May to manufacture active ingredients for its diabetes and weight loss drugs.