Oct 09, (New York): On Monday, the major stock indexes on Wall Street went up, and energy stocks performed well as investors reacted to news about the conflict between Israel and the Palestinian group Hamas.
The stock prices of companies that make weapons, like Northrop Gruman Corp, L3Harris Technologies Inc., Huntington Ingalls Industries Inc., Lockheed Martin Corp., and General Dynamics Corp., saw significant increases on Monday. Each of these companies experienced gains of at least 8% in the trading session, marking the largest increase in over three years.
The Israeli military called up reserve forces and imposed a complete blockade on the Gaza Strip, indicating a possible ground attack to counter Hamas, which had launched a deadly attack over the weekend.
However, later in the day, a senior Hamas official mentioned that the group is open to discussions for a potential truce with Israel. U.S. President Joe Biden stated that he directed his team to work with regional partners to caution anyone trying to exploit the situation.
The conflict news caused an increase in oil prices due to concerns about oil supply. Nevertheless, stock indexes rebounded from earlier losses, partly because of more dovish comments from Federal Reserve officials.
Investors seemed to refocus on U.S.-related matters, particularly the economy and corporate earnings. They believe the U.S. economy is still growing, and earnings reports, starting this week, are expected to show recovery from the recession.
Several European airlines, including Deutsche Lufthansa AG, Air France-KLM, and budget airline Wizz Air Holdings Plc, stopped their flights to the city. This news caused a drop in the stock prices of airlines, with IAG SA, the parent company of Iberia Express, seeing a 6.1% decrease, and Ryanair Holdings plc losing 3.7% in local markets.
Here are the closing numbers for the major indexes:
- The Dow Jones Industrial Average went up by 197.07 points to 33,604.65.
- The S&P 500 gained 27.16 points to 4,335.66.
- The Nasdaq Composite added 52.90 points to 13,484.24.
The CBOE volatility index, which is often called the “fear gauge,” ended at 17.70.
Safe-haven assets like gold remained in demand, with gold prices going up by 1.6%. However, the U.S. dollar index gave up its earlier gains and decreased by 0.18%.
Rising oil prices led to a 3.5% increase in the S&P energy sector, making it the top gainer among the S&P 500’s industry sectors.
Airlines such as United, Delta, and American Airlines suspended direct flights to Tel Aviv, which, coupled with rising oil prices, caused their stocks to drop by more than 4% each. This affected the S&P 500 Passenger Airlines index, which lost 3.7%.
Defense companies saw gains after the Israel news, with the S&P 500 Aerospace & Defense index going up by 5.6%. Northrop Grumman and L3Harris Technologies were among the biggest gainers.
Exchange-traded funds related to Israel saw declines, including the iShares MSCI Israel ETF and the ARK Israel Innovative Technology ETF.
In summary, the stock market reacted positively to economic and earnings prospects, even in the face of geopolitical tensions, with energy stocks and defense companies performing well, while airlines and ETFs linked to Israel saw declines.
–> Inputs from Bloomberg and Reuters
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