U.S. stocks ended sharply lower on Friday, extending their losses as oil prices surged 12%, due to the ongoing Middle East conflict, while a disappointing jobs report dented investors’ sentiment. All three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 1% or 453.19 points, to finish at 47,501.55 points, after losing as much as 950 points at its session lows.
The S&P 500 slid 1.3%, to close at 6,740 points, recording its worst week since mid-October. Tech, industrials, and consumer discretionary stocks were the worst performers, while consumer staples stocks were the biggest gainer
The Information Technology Select Sector SPDR (XLK) slid 2.9%. The Industrials Select Sector SPDR (XLI) lost 2.1%. The Consumer Discretionary Select Sector SPDR (XLY) also declined 2.1%. The Consumer Staples Select Sector SPDR (XLP) gained 0.4% each. The Health Care Select Sector SPDR (XLV) climbed 1.9%. Nine out of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq declined 1.6%, to end at 22,387.68 points.
The fear gauge, CBOE Volatility Index (VIX), was up 24.17% to 29.49. A total of 19.95 billion shares were traded on Friday, higher than the last 20-session average of 17.82 billion.
Middle East Crisis Triggers Spike in Oil Prices
Oil prices spiked further on Friday as geopolitical tensions in the Middle East escalated. West Texas Intermediate crude oil jumped past $90 per barrel, ending 35% higher for the week. International Brent surged nearly 8.5% to $92 per barrel. The spike in oil prices came as the U.S.-Iran war intensified, raising questions about global energy supply.
Friday’s jump came after President Donald Trump wrote on social media that there would be no deal with Iran unless Tehran agrees to an “unconditional surrender.” With no signs of the United States or Iran stopping attacks, the war is believed to last longer than expected. Speculation is also rife that oil prices could reach as high as $150 a barrel.
Shares of travel and transportation companies suffered the most on Friday on fears that the war could disrupt global oil supply. Shares of Royal Caribbean Cruises Ltd. (RCL) fell 1.2%, while Norwegian Cruise Line Holdings Ltd. (NCLH) declined 4.2%. Royal Caribbean Cruises has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Weak Jobs Report Dents Investors’ Sentiment
To make things worse, a weaker-than-expected jobs report dented investors’ sentiment. Data from the Bureau of Labor Statistics showed that the U.S. economy lost jobs in February. Nonfarm payrolls fell 92,000 last month, sharply higher than the consensus estimate of a decline of 50,000.
This is the third time that nonfarm payrolls have declined in the past five months. Also, the unemployment rate rose to 4.4% in February. The health care sector, one of the biggest job creators in the economy, saw a decline of 28,000 jobs triggered by a massive strike.
The jobs report will now complicate the Federal Reserve’s path to rate cuts, with many concerned about whether the central bank will cut rates at all due to fears of inflationary pressures.
Economic Data
Although job losses and unemployment increased in February, the Labor Department’s report showed that average hourly earnings increased 0.4% in February and 3.8% from year-ago levels, both surpassing estimates by 0.1%.
Weekly Roundup
For the week, the Dow ended 3% lower. The S&P 500 and the Nasdaq were down 2% and 1.2%, respectively.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Royal Caribbean Cruises Ltd. (RCL): Free Stock Analysis Report Norwegian Cruise Line Holdings Ltd. (NCLH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
