On Friday, stocks experienced a significant decline following Israel’s initiation of a series of airstrikes on Iran. This development led to an increase in energy prices, further complicating an already tense geopolitical landscape. The Dow Jones Industrial Average experienced a decline of 769.83 points, translating to a decrease of 1.79%, concluding at 42,197.79. The S&P 500 experienced a decline of 1.13%, concluding at 5,976.97, whereas the Nasdaq Composite fell by 1.30%, finishing at 19,406.83.
Nvidia and other equities that have spearheaded the market’s recovery from the April lows experienced declines as investors opted to reduce their exposure to risk. Oil and defense equities experienced an uptick. Exxon experienced an increase of 2%, whereas Lockheed Martin and RTX both surged by over 3%. The market decline commenced Thursday evening when Israel’s defense minister, Israel Katz, announced a special state of emergency in response to an Israeli offensive against Iran. According to NBC News, two U.S. officials stated that there is no involvement or assistance from the United States.
On Friday, the decline in stocks intensified following the announcement from the Israel Defense Forces regarding Iran’s missile launch toward Israel, which was characterized as a response to Israel’s ongoing airstrikes. Iranian state television announced on Friday afternoon that the country will abstain from participating in the sixth round of nuclear negotiations with the U.S. scheduled for this weekend. Brent crude futures and West Texas Intermediate crude futures experienced an increase exceeding 7%. At one point, WTI crude oil approached $74 a barrel. Gold prices increased to a level not seen in nearly two months, propelled by heightened demand for safe-haven assets. This conflict introduces additional complexities to the already substantial array of concerns being monitored by the markets–these issues are not dissipating. “At the bare minimum the spike in crude, if it persists, will have an almost immediate impact on inflation numbers,” said Mark Malek, chief investment officer of Siebert Financial.
President Donald Trump issued a warning to Iran on Friday morning via his social media platform, Truth Social, urging the nation to engage in negotiations. “There has already been significant loss of life and devastation, yet there remains an opportunity to halt this violence, with forthcoming attacks anticipated to be even more severe.” Trump stated, “Iran must make a deal, before there is nothing left, and save what was once known as the Iranian Empire.” “No more death, no more destruction; take action before it is too late.” In a distinct early morning statement, Trump indicated that he is offering Iran “perhaps, a second chance” to negotiate a nuclear agreement. Two months prior, I issued Iran a 60-day ultimatum to ‘make a deal.’ They ought to have complied! Today marks the 61st day,” he wrote.
In a separate development, a closely monitored survey from the University of Michigan, published on Friday, revealed an increase in consumer sentiment during the previous month. The university’s Survey of Consumers increased to 60.5 in June, surpassing the Dow Jones estimate of 54 and reflecting a 15.9% rise from the previous month. The sell-off on Friday resulted in the major averages closing the week in negative territory. The S&P 500 experienced a decline of 0.4%, whereas the Nasdaq recorded a decrease of 0.6%. The Dow experienced a decline of 1.3% throughout the week.