US open: Wall Street slips amid Hamas-Israel conflict, oil price gains

dl new york city nyc ny us usa united states of america manhattan skyline city finance trading nyse dow jones sp nasdaq dollar dollars usd fed federal reserve — ManhattanSharecast photo / Josh White

US stocks were trading on the back foot in the wake of heightened geopolitical tensions in the Middle East.

As of 1544 BST the Dow Jones Industrial Average was drifting lower by 0.21% to 33,377.01, while the S&P 500 was down 0.31% to 4,294.41 and the Nasdaq Composite was off by 0.72% to 13,335.60.

In parallel, front-dated West Texas Intermediate crude oil futures were running up 4.47% to $86.46 a barrel on the NYMEX.

"A sharp rise in energy prices, along with concerns over an escalation outside the current counterparties of Hamas and Israel, as Israeli forces hit back hard, is keeping investors on edge," said Michael Hewson, chief market analyst at CMC Markets UK.

Crude prices, which dropped sharply last week, were rebounding strongly after a surprise assault by Hamas terrorists on Israel on Saturday morning that killed more than 700 people, including 260 at a music festival.

Israel swiftly retaliated, launching air strikes in Gaza, which were said to have killed more than 500.

Israeli Prime Minister Benjamin Netanyahu declared that Hamas would "pay a price it has never known before".

"As we saw following the start of the Russo-Ukrainian war, the focus will now be on attempting to assess the ramifications of the conflict, and whether it will widen to include other states," said Chris Beauchamp, chief market analyst at IG.

No major economic data was due for release in the States with the US observing Columbus Day, but speeches from Fed members Lorie Logan and Philip Jefferson will be closely watched, especially in the aftermath of last Friday's forecast-smashing jobs report.

Non-farm payrolls surged by 336,000 last month, double what economists had pencilled in (170,000). What’s more, that was on top of upwards revisions to figures for the previous two months by a combined 119,000.

The strong beat led to commentary that the Fed may once again tighten monetary policy to cool down an overheating economy; though others believe that the recent surge in bond yields may force policymakers to be more cautious about further rate hikes just yet.

"We will look to the tone of Fed speak to send a clearer message about the potential for another hike later this year and generally expect rates to remain choppy with a bias to higher," said analysts at TD Securities in an email.

Oil stocks surge

In stock movements, gains in oil futures were benefitting the likes of ExxonMobil, Chevron, Conocophillips, EOG Resources and Occidental Petroleum.

Disney was also rising after activist investor Nelson Peltz raised his stake to over 30m shares, worth over $2.5bn, through his firm Trian Fund Management. Peltz is said to be pushing for multiple seats on the board.

Financial stocks were under pressure as investors scaled back their appetite for risk, with Bank of America, Wells Fargo and JPMorgan Chase & Co futures falling ahead of the opening bell.

Dow Jones - Risers

Chevron Corp. (CVX) $166.93 2.90%
Caterpillar Inc. (CAT) $268.79 1.03%
Amgen Inc. (AMGN) $269.46 0.75%
Walt Disney Co. (DIS) $83.37 0.52%
Verizon Communications Inc. (VZ) $30.99 0.45%
Walgreens Boots Alliance, Inc. (WBA) $21.84 0.16%
Cisco Systems Inc. (CSCO) $53.48 0.06%
Travelers Company Inc. (TRV) $162.98 0.02%
Dow Chemical Co. (DOW) $50.28 0.00%
Dowdupont Inc. (DWDP) $0.00 0.00%