How Will Israel Retaliate? – US Market Wrap

US stocks churned as traders weighed the prospect of escalating conflict in the Middle East against positive economic data. Crude and the dollar extended advances.

The S&P 500 and Nasdaq 100 ended the day marginally lower after wavering between small gains and losses for much of the morning. The mood on Wall Street soured after puzzling comments from President Biden on if he would support Israel striking Iran’s oil facilities.

Oil benchmarks surged. Brent crude climbed above $77 a barrel for the longest run of daily gains since August, while WTI passed $73. Investors are concerned that, should Israel strike key Iranian assets, the Islamic Republic will lash out and escalate the conflict, dragging in more countries and potentially disrupting global energy shipments.

That’s left US equity benchmarks on course for the first weekly loss in four as the world awaits an Israeli response to Iran’s missile strike. Israel’s warplanes bombed Beirut overnight, after eight of its soldiers were killed in southern Lebanon in battles against Hezbollah. Wall Street’s fear gauge, the VIX, resumed its climb, flashing a warning signal that more stocks volatility lies ahead.

Earlier in the session, equities briefly erased losses after a readout showed the US services sector in September expanded at the fastest pace since February 2023. The Institute for Supply Management’s index of services jumped to 54.9, beating estimates. Readings above 50 indicate expansion.

Other data showed applications for US unemployment benefits rose slightly last week to a level that is consistent with limited number of layoffs. Continuing claims, a proxy for the number of people receiving benefits, were little changed at 1.83 million in the previous week, according to Labor Department data released Thursday.