Technology giants entered a correction on Friday as the war in Iran continued to escalate and oil closed above above $100 a barrel once again.
Bloomberg’s gauge for the Magnificent Seven closed 1.6% lower, putting the group of mega-cap names — including Nvidia Corp. and Tesla Inc. — into correction, or 10% below its October record. Investors fled riskier corners of the market as concern deepened over the how long the Middle East conflict will drag on, and worries lingered over the artificial intelligence trade.
The S&P 500 Index closed 0.6% lower, declining for a third-straight week, its longest losing streak in a year. The benchmark is now 28 points away from its 200-day moving average, which many hoped would mark a bottom. The tech-heavy Nasdaq 100 Index fell 0.6%, also falling for a third week. Brent crude rose 2.8% to trade at $103.31 a barrel.
“Both stocks and Treasuries have swung from modest losses to marginal gains several times already, but equity investors are favoring the defensive characteristics of the healthcare, utilities and consumer staples sectors while also scooping up financials and real estate,” said José Torres, senior economist at Interactive Brokers.
Hostilities with Iran continued, as did the worst supply disruption in the history of the oil market. Donald Trump threatened Iran with further attacks while Defense Secretary Pete Hegseth said Friday marked the largest attacks yet against the Islamic Republic, with the US-Israeli alliance hitting around 15,000 targets since the war began.
Hegseth also said Iran’s new leader Mojtaba Khamenei has been wounded. Additionally, Trump said the US has Iranians living in the country “under watch” amid new concerns about the potential for domestic terrorism during the war with Iran.
Consumer sentiment declined to a three-month low as fears mounted in recent weeks about the impact on gasoline prices from the war with Iran. The preliminary March sentiment index dropped to 55.5 from 56.6 in February, according to the University of Michigan.
Earlier, a report showed the Fed’s preferred measure of inflation — the personal consumption expenditures price index — rose 0.4% in January even before war started. Another report showed the US economy expanded at a 0.7% annualized rate in the fourth quarter compared to an initial estimate of 1.4%.
Attention now turns toward the Fed’s meeting next week, where officials are expected to leave interest rates unchanged. That prediction had preceded the latest events in the Middle East.
“We expect the Fed to highlight the uncertainty on both sides of the mandate,” LPL Financial’s Jeffrey Roach said. “Inflation will be impacted by the war and unemployment will be impacted by the disruptions in the labor market. Expect to see some important revisions in the upcoming Summary of Economic Projections next week.”
The combination of spiking oil prices and private credit concerns are causing market activity to resemble the lead-up to the global financial crisis, Bank of America Corp. strategist Michael Hartnett said. Hartnett noted that asset performance this year has been “more ominously close” to the price action seen from mid-2007 to mid-2008.
Written by: Joel Leon — With assistance from Monique Mulima @Bloomberg
The post “Tech Giants Enter Correction as Mideast War Drags Stocks Down” first appeared on Bloomberg
