Wall Street opened lower on Friday as the escalating conflict involving Iran approached its fourth week, unsettling energy markets and forcing investors to reassess expectations for interest-rate cuts by the Federal Reserve.
Dow Jones Industrial Average, S&P 500, and Nasdaq 100 all opened lower.
Dow Jones Industrial Average was down 0.23% or 104 points. The S&P 500 fell 0.45% while Nasdaq 100 declined 0.64%.
The conflict showed no signs of easing, with Iran reportedly attacking an oil refinery in Kuwait and discussions emerging around potential US actions targeting Iran’s Kharg Island.
These developments have heightened concerns about disruptions to the Strait of Hormuz, a critical global oil artery.
Oil prices, after briefly easing, resumed their rally. Brent crude rose as high as $111.22 a barrel, while West Texas Intermediate climbed to $96.40, keeping energy markets volatile and adding pressure to equities.
Oil prices complicate Fed Policy Outlook
The surge in oil prices has added a layer of complexity for policymakers at the Federal Reserve.
While officials are still projecting at least one rate cut this year, market expectations have shifted significantly.
Traders are now pushing bets for a rate cut to 2027, compared with December 2026 earlier this month.
Fed Governor Christopher Waller warned that persistently high oil prices could feed into core inflation if sustained over months.
Despite the uncertainty, some corporate signals offered reassurance.
FedEx issued upbeat forecasts and said global demand remained steady, sending its shares up 3.2%.
Rival United Parcel Service also edged higher.
Energy companies Halliburton and Cheniere Energy were also trading higher on Friday.
Volatility rises amid “triple witching” and weak trend
Markets also faced technical and structural pressures.
Friday marked the quarterly “triple witching” event—when stock options, index options, and futures expire simultaneously—often leading to increased trading volumes and sharper volatility.
The CBOE Volatility Index ticked higher, reflecting investor unease.
Major indexes were on track for their fourth consecutive weekly losses, with all three falling below their 200-day moving averages, a key long-term technical indicator.
The small-cap-focused Russell 2000 briefly entered correction territory earlier in the week.
Dow and Nasdaq are trading around 8% below its all time highs from February 10 and October 29 respectively.
The S&P 500 is 5% below its all time high.
Sector performance diverged sharply.
Energy stocks extended a record winning streak, benefiting from geopolitical risks and higher crude prices.
Meanwhile, technology shares showed mixed movement, with Micron shares traded in green while AMD shares fell.
However, Super Micro Computer plunged 24.6% after reports that individuals linked to the company were charged in a $2.5 billion technology smuggling case involving China.
Amazon shares fell 1% after a Reuters report said, the company is planning to release a new smartphone to compete against Apple and Samsung.
Investor sentiment remains fragile. As Wells Fargo strategist Scott Wren noted: “All the near-term action depends on the Strait opening,”
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