The S&P 500 Index closed down 0.61% on Friday, marking a 3.5-month low, alongside declines for the Dow Jones Industrial Average (down 0.26%) and Nasdaq 100 (down 0.62%). This retreat followed a significant rise in crude oil prices, which climbed over 3% amid ongoing tensions in Iran, including recent attacks on the Strait of Hormuz. A Wall Street Journal report indicated that the U.S. is deploying a Marine expeditionary unit to the Middle East in response to escalating threats.
In economic indicators, U.S. personal spending rose 0.4% in January, slightly above expectations, while personal income increased by the same percentage, below expected growth. The core PCE price index, the Fed’s preferred measure of inflation, rose 3.1% year-over-year, the highest increase in 1.75 years. Moreover, job openings reportedly surged by 396,000 to a total of 6.946 million, exceeding forecasts.
On the bond market front, the German 10-year bund yield reached 2.99%—a 2.25-year high—while U.S. Treasury yields also increased, with the 10-year T-note yield climbing to 4.29%. The ongoing conflict in Iran threatens to disrupt around 7.5% of global oil supply, potentially leading to crude prices escalating to levels not seen since 2008, as per Goldman Sachs.
