US Stocks Decline Amid Middle East Geopolitical Tensions

US stocks have significantly declined since the Israeli Air Force declared maximum alert and the army suspended vacations for combat forces due to concerns about the possibility of Iran launching attacks on Israeli territory, which brought back geopolitical tensions in the Middle East.

Israeli Air Force raised its alert to the maximum level on Thursday in preparation for dealing with any possible attack, whether by missiles or drones, from Iran. This comes after the killing of a senior commander in the Iranian Revolutionary Guard in Syria earlier this week. Israeli forces are also considering reopening shelters in Tel Aviv as a precaution against any possible attacks, according to Iran’s official Mahr news agency.

An Israeli army statement said: “According to the assessment of the current situation, it was decided to temporarily suspend holidays for all combat units of the Israeli army.”

The Dow Jones Industrial Average fell by about 1.00%, or 400 points, to settle at 38,726 points. The Standard & Poor’s 500 fell to 5,172 points after a loss of 40 points, or 0.3%. The Nasdaq Heavy Technology Industries followed the same approach, settling in the downward trend at 16,080 points.

Stocks experienced a volatile trading session on Thursday, with the Dow Jones Industrial Average losing 1.35% and the S&P 500 dropping 1.23%. The tech-heavy Nasdaq Composite also dipped 1.40%. The Dow Jones Industrial Average suffered its worst session since March 2023, with the S&P 500 dropping 1.23% and the Nasdaq Composite dipping 1.40%. The Dow swung over 860 points between its highs and lows of the day. Crude oil surged midday, reaching its highest level since October, raising concerns about energy prices reaccelerating inflation.

Minneapolis Fed President Neel Kashkari commented on the possibility of cutting rates if inflation remained sticky, adding to a recent chorus of Fed speakers discussing policy. The 10-year Treasury yield rose off the lows of the session, reaching a new high for the year. Sam Stovall, CFRA Research chief investment strategist, said investors are taking a wait-and-see attitude, with the 10-year yield being the key driving force. The market remains expensive, with the S&P 500 trading at a 33% premium to its long-term average.