Conflict Fears Rattle Markets; Fed Holds Steady

Stocks were mixed during the holiday-shortened trading week as uncertainty over conflict in the Middle East weighed on investors.

The Standard & Poor’s 500 Index slipped by 0.15 percent, while the Nasdaq Composite Index rose by 0.21 percent. The Dow Jones Industrial Average was flat (+0.02 percent). The MSCI EAFE Index, which tracks developed overseas stock markets, declined 1.54 percent.^1,2

Stocks Rise, Then Slump

Stocks opened higher, and oil prices fell at the start of the week as investors hoped Middle Eastern tensions would ease.³

However, as investors parsed through updates on the conflict, stocks fell over ongoing uncertainty. Conflicting statements from those involved, as well as from world leaders, contributed to the uncertainty.⁴

Midweek, stocks rallied ahead of the Fed's interest rate decision. Markets seemed to dismiss news that housing starts dropped unexpectedly to their lowest level in five years.

The Fed held short-term rates steady. Stocks moved up and down during the Fed Chair’s press conference before ending the trading session slightly down ahead of Thursday’s stock market holiday.⁵

Following the holiday, anxious investors refocused on geopolitical tensions and developments. As the week closed out, investors appeared to take a risk-off approach heading into the weekend.⁶