Wall Street declines on Middle East turmoil

The CBOE volatility index (.VIX), Wall Street’s “fear gauge”, also rose to 18.54, reflecting investor anxiety. Amazon and Nvidia lead declines in Big Tech and several US airlines suspend Israel flights. Tesla falls on lower deliveries of China-made electric vehicles.

Wall Street’s main indexes fell on Monday as a deepening conflict between Israel and the Palestinian Islamist group Hamas roiled global markets and pushed investors toward safe-haven assets, while crude prices jumped around 4%.

Israel said its troops backed by helicopters had killed a number of armed infiltrators entering the country from Lebanon, raising fears fighting could spread two days after Hamas gunmen burst in from Gaza on a deadly rampage.

The Israeli military has deployed 300,000 reservists and is enforcing a complete blockade of the Gaza Strip, indicating potential ground assault plans. US Defense Secretary Lloyd Austin has announced support by sending military ships and aircraft closer to Israel.

The Dow Jones Industrial Average (.DJI) was down 13.18 points, or 0.04%, at 33,394.40, the S&P 500 (.SPX) was down 6.67 points, or 0.15%, at 4,301.83, and the Nasdaq Composite (.IXIC) was down 75.77 points, or 0.56%, at 13,355.57. A recent surge in US Treasury yields had pressured equities. The US bond market was shut on Monday for Columbus Day.

Major technology stocks Apple, Microsoft, Nvidia and Amazon.com fell between 0.2% and 2.7%. Traditional safe-haven assets including gold and the US dollar gained, while crude prices increased.

The market opened with considerable volatility due to recent events and speculation about the future. Energy was the top S&P 500 sector gainer, jumping 3.6% and on track for its best single-day performance in six months. United Airlines, Delta Air Lines, and American Airlines suspended direct flights to Tel Aviv, causing shares to drop around 5% each.

Defense companies Northrop Grumman, RTX, General Dynamics, L3harris, and Lockheed Martin rose between 4.3% and 8.7%, while consumer discretionary and consumer staples stocks were the worst hit. Exchange-traded funds exposed to Israel, including iShares MSCI Israel ETF and the ARK Israel Innovative Technology ETF, slid 7.8% and 4.6%, respectively.

Key inflation readings, such as September’s producer price and consumer price indexes, and the Fed’s September meeting minutes, will be in focus for the week. Tesla fell 2.5% due to a decrease in China-made EV sales volume. The S&P index recorded four new 52-week highs and 18 new lows, while the Nasdaq recorded 24 new highs and 236 new lows.