U.S. equities closed lower on Friday, with technology stocks leading the decline, marking the fourth consecutive week of losses for the three major indices. The Dow Jones Industrial Average and the Nasdaq Composite edged closer to correction territory. The ongoing conflict between the U.S., Israel, and Iran has driven oil prices significantly higher, with no signs of a resolution. U.S. President Donald Trump stated on Friday that he is "not interested in a ceasefire."
The Dow Jones fell by 443.96 points, or 0.96%, to close at 45,577.47. The Nasdaq dropped 443.08 points, or 2.01%, ending the session at 21,647.61. The S&P 500 index declined by 100.01 points, or 1.51%, finishing at 6,506.48.
Both the Dow and the Nasdaq are approaching a correction, defined as a 10% decline from their recent peaks.
All major indices recorded their fourth straight week of losses. For the week, the S&P 500 and the Dow declined by 1.91% and 2.11% respectively, while the Nasdaq fell by 2.1%.
However, Bob Elliott, CEO of Unlimited, suggested that the market remains overly optimistic about the potential impact of the war on corporate earnings and the economy, noting that the S&P 500 is still only about 5% below its all-time high.
He commented, "When you compare stocks to bonds, the market has been pricing in stronger growth since the conflict began. This makes no sense. Even if this conflict were resolved tomorrow, the real purchasing power of American households has essentially been reduced by about 1% to 2%."
There are no indications that the conflict involving the U.S., Israel, and Iran is nearing an end. U.S. officials have indicated that the White House is deploying hundreds of Marines to the Middle East and evaluating plans to seize Iran's Kharg Island oil export hub.
President Donald Trump told reporters on Friday that he has no interest in pursuing a ceasefire agreement with Iran.
"We can have talks, but I don't want a ceasefire," Trump said before departing the White House for Florida. "You know, you don't have a ceasefire when you're in the process of a complete victory."
"They have no navy. They have no air force. They have nothing," Trump continued.
This follows overnight retaliatory attacks between Iran and Israel, with Iran launching new assaults on energy facilities in the Persian Gulf region. Media reports, citing U.S. officials, indicate the Pentagon is deploying additional thousands of Marines to the Middle East.
Reports that Iraq has declared force majeure on all oil fields operated by foreign companies intensified the afternoon sell-off in U.S. stocks.
Ross Mayfield, an investment strategist at Baird, stated, "If this escalates into an operation involving ground troops, then we could be facing at least several more weeks of this market with high oil prices, high gas prices; you'll be watching every headline about energy infrastructure in the region. Frankly, the current level of selling in the stock market does not yet fully reflect this type of event, so there may still be some downside potential ahead."
Oil prices moved higher after the market close, with West Texas Intermediate crude rising nearly 3% and Brent crude futures last up 3.6%.
Jim Reid of Deutsche Bank noted that Friday marked the 15th trading day since the conflict erupted.
He said, "This is typically the average time for the U.S. stock market to bottom following a geopolitical shock. However, with so much uncertainty, it is difficult to trade based on averages right now, so news headlines will be more important than historical patterns. But if you are looking for optimism, the typical geopolitical playbook at least offers some hope. So far, we have not deviated from that script."
Meanwhile, concerns about resurgent inflation and the Federal Reserve potentially holding off on interest rate cuts pushed U.S. Treasury yields higher on Friday, adding further pressure to the day's weak market performance.
