Investors face uncertainty with geopolitical risks rising and payroll data set to impact Fed decisions
US stock markets ended Wednesday just above the flatline, with investors cautious due to rising tensions in the Middle East, as reported by CNBC.
The S&P 500 edged up 0.01 percent, finishing at 5,709.54. The Nasdaq Composite increased by 0.08 percent to 17,925.12, while the Dow Jones Industrial Average rose 39.55 points, or 0.09 percent, to close at 42,196.52.
Nike shares fell 6.8 percent after the company withdrew its full-year guidance in anticipation of a CEO transition. Tesla stock declined 3.5 percent following the release of its delivery numbers, though Nvidia's 1.6 percent rise helped buoy the technology sector.
This cautious market reaction follows a losing session earlier in the week after Iran launched ballistic missiles at Israel, leading to reduced risk appetite and dampening investor enthusiasm at the start of the new month and quarter.
As Israel initiates a ground operation into Lebanon and tensions escalate with Hezbollah, backed by Iran, investors are bracing for more uncertainty.
Oil prices, particularly West Texas Intermediate crude, continued to rise, building on Tuesday’s gains amid the geopolitical instability.
Energy stocks outperformed once again, with the Energy Select Sector SPDR Fund (XLE) climbing 1 percent, marking its fourth consecutive positive session. Energy was the only S&P 500 sector to post a gain exceeding 1 percent.
The CBOE Volatility Index (VIX), often referred to as Wall Street’s ‘fear gauge,’ decreased after experiencing a spike on Tuesday.
“We’re really seeing the market have a little bit of a hiccup with this recent spike in geopolitical tensions,” said Lisa Erickson, head of public markets due diligence at US Bank Wealth Management.
“While investors typically don’t worry too much about those events until there’s a clear economic impact, we’re just seeing some nervousness.”
On the economic front, ADP’s Wednesday report showed better-than-expected growth in private payrolls for September.
This comes ahead of Friday’s closely watched nonfarm payroll report, which could have a significant impact on the market's direction and influence the Federal Reserve’s upcoming rate decisions as its cutting cycle begins.
