[New York Stock Market] Nasdaq Falls 1.53% Amid Iran Retaliatory Attack Dampening Sentiment

The three major indices of the U.S. New York stock market all closed lower on the 1st (local time) as the Middle East crisis escalated further due to Iran's retaliatory attack on Israel. International oil prices surged more than 5% at one point during the session.

[Image source=Reuters Yonhap News]

On that day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, which focuses on blue-chip stocks, closed at 42,156.97, down 173.18 points (0.41%) from the previous session. The S&P 500 index, centered on large-cap stocks, fell 53.73 points (0.93%) to 5,708.75, and the tech-heavy Nasdaq index closed down 278.81 points (1.53%) at 17,910.36.

By sector, eight of the eleven sectors in the S&P 500 declined, excluding energy, telecommunications, and utilities. Notably, technology stocks dropped more than 2%. Nvidia, the leader in artificial intelligence (AI) stocks, fell 3.66%, and Apple declined 2.91%. Other major semiconductor stocks such as Intel, AMD, and Qualcomm also recorded losses in the 2-3% range. Super Micro Computer, which began trading at a 10-for-1 stock split price from this day, initially showed gains in the morning session but ultimately closed down over 2%.

On the other hand, energy stocks showed strength. APA rose 4.91%, Halliburton gained 3.03%, and ExxonMobil increased 2.31%. Defense contractors including Lockheed Martin also saw their stock prices rise. Additionally, Boeing rose more than 1% following news that it is considering raising $10 billion through additional stock issuance.

Investors were cautious on the first trading day of the fourth quarter due to concerns over the escalation of the Middle East conflict following Iran's retaliatory attack on Israel. Even before Iran's missile attack, statements from U.S. White House officials indicating that "an attack appears imminent" caused the Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's fear gauge, to soar, and international oil prices surged.

The Iranian Revolutionary Guard Corps stated in a statement that "ballistic missiles were fired targeting important military and security objectives in the heart of the occupied territory (Israel)." This came about five months after missile and drone strikes on mainland Israel in April. The Revolutionary Guard described this missile launch as retaliation for the deaths of Hamas leader Ismail Haniyeh, Hezbollah leader Hassan Nasrallah, and Abbas Nilforoushan, deputy commander of the Revolutionary Guard's operations. The Israeli military also announced that Iran fired approximately 180 missiles that day.

Subsequently, as it was confirmed that Israel's damage was not as severe as expected, the rise in international oil prices and the decline in stock prices narrowed before the market closed, but tensions in the Middle East remain ongoing. Keith Buchanan, chief portfolio manager at Global Investment, commented, "Fear of risk transfer always makes the market unstable."

Meanwhile, the market also paid attention to the indicators released that day and the U.S. port union strike situation. The Institute for Supply Management (ISM) manufacturing PMI for September recorded 47.2, below the baseline of 50, indicating continued contraction in the manufacturing sector. ISM stated, "The manufacturing sector has been in contraction for six consecutive months," and "22 out of the past 23 months have been in contraction." S&P Global's September manufacturing PMI also remained low at 47.3. The port union, which voted to strike for the first time in 47 years, began the strike that day, further heightening supply chain concerns. Additionally, the September employment report (due on the 4th) is scheduled to be released this week. If nonfarm payrolls for September fall short of expectations or the unemployment rate is higher than estimated, concerns about a recession could intensify again.

In the New York bond market that day, Treasury yields declined. This was a result of investors flocking to safe-haven assets amid rising tensions in the Middle East. A decline in Treasury yields means an increase in Treasury prices. The U.S. 10-year Treasury yield, a global benchmark for bond yields, fell more than 7 basis points from the previous session, hovering around 3.72%. The 2-year yield, sensitive to monetary policy, also dropped to around 3.60%.

International oil prices surged. On the New York Mercantile Exchange, November delivery West Texas Intermediate (WTI) crude oil closed at $69.83 per barrel, up $1.66 (2.44%) from the previous session. Due to growing fears of a full-scale war following Iran's attack on Israel, the intraday increase exceeded 5% at one point.