US stocks experienced a significant decline on Friday as concerns over escalating tension in the Middle East prompted investors to seek refuge in safe-haven assets like bonds and gold. The Dow Jones Industrial Average dropped 475 points, or 1.2%, while the S&P 500 and Nasdaq Composite fell by 1.5% and 1.6%, respectively. This downward trend resulted in all three major indexes finishing the week in negative territory.
The White House issued alerts for potential attacks by Iran or its proxies following an Israeli strike in Damascus, further fueling apprehensions in the market. Oil prices surged on Friday due to fears of heightened regional tensions exacerbated by the conflict in Gaza. Brent crude futures settled at $90.45 a barrel, while West Texas Intermediate crude futures reached $85.66 a barrel.
Chicago Federal Reserve President expressed concerns about the impact of rising oil prices on inflation and production costs, emphasizing the need to monitor commodity prices closely. Investors responded to these uncertainties by flocking to safe-haven assets, with gold futures rising to $2,356.20 per troy ounce and Treasury yields declining as traders sought refuge in bonds.
JPMorgan Chase CEO highlighted geopolitical turmoil and persistent inflation as significant causes for investor apprehension. The bank's shares fell by 6.5% on Friday, reflecting the broader market sentiment. The prevailing concerns about geopolitical instability coincide with worries about persistent inflation potentially influencing the Federal Reserve's interest rate decisions.
Amidst these challenges, recent data from the University of Michigan's consumer survey indicated a dampening of Americans' economic outlook due to stubborn inflation. The survey revealed that consumer sentiment remained relatively stable in April, underscoring the impact of ongoing economic uncertainties on public perception.
