The intensifying war between Israel and Hamas has added geopolitical danger to fears about increasing inflation and interest rates in the United States.
The Dow Jones Industrial Average was down 147 points, or 0.4%, at 10:55 ET (14:55 GMT), while the S& P 500 was down 0.5% and the NASDAQ Composite was down 0.9%.
The major Wall Street indices concluded last week on a high note, as investors closed their short positions in the aftermath of stronger-than-expected monthly employment data.
The 30-stock Dow finished over 300 points, or 0.9%, higher on Friday, while the benchmark S& P climbed 1.2% and the tech-heavy Nasdaq gained 1.6%.
Inflationary fears are exacerbated by rising oil costs.
However, this upbeat tone vanished once the Israeli-Palestinian issue erupted into full-fledged war over the weekend, when the Islamist group Hamas launched an attack on Israel, sparking a deadly fight that killed hundreds.
As a consequence, oil prices rose, rebounding from a decline last week, as the conflict in the Middle East increased political uncertainty and compounded supply concerns.
Crude futures in the United States were up more than 4%, while the Brent contract was up 3.9%.
This has fanned fears that a protracted crude surge could exacerbate inflationary pressures, forcing central banks throughout the world to keep borrowing prices higher for an extended length of time.
Crude oil’s surge boosted energy stocks, with Exxon Mobil Corp (NYSE: XOM) surging more than 3.8% and Chevron Corp (NYSE: CVX) climbing 2.9%.
CPI statistics for September are coming this week.
Wall Street was already in a precarious position as investors grappled with dual concerns about inflation and rising interest rates. Last week’s data revealed a stronger-than-expected increase in the number of jobs added by the American economy throughout the month, adding to these worries.
Consumer inflation exists.
Consumer Price Index (CPI) in the United States Year-on-Year
Release date: October 12, 2023
3.6% is forecast.
Previous: September 3.7% data is anticipated later this week, and strong statistics might strengthen the Fed’s view that interest rates should remain higher for longer.
The CPI data for August showed the biggest increase in 14 months as gasoline prices soared, while core inflation, which includes food and fuel expenses, grew at the weakest rate in almost two years.
Banking titans kick off the new earnings season.
In business news, the third quarter earnings season kicks out this week, with JPMorgan Chase (NYSE: JPM), Citigroup (NYSE: C), and Wells Fargo (NYSE: WFC) all set to report before the market opens on Friday.
Citigroup has already agreed to sell its retail wealth management business in mainland China to HSBC (LON: HSBA), according to announcements issued by both banks on Monday.
Other firms scheduled to report this week include PepsiCo (NASDAQ: PEP) on Tuesday, Delta Air Lines (NYSE: DAL) on Thursday, and insurer UnitedHealth Group (NYSE: UNH) on Friday.
Furthermore, according to the Wall Street Journal, Nelson Peltz’s Trian Fund Management is set to request additional seats on the board of Walt Disney (NYSE: DIS), in which it holds a $2.5 billion interest, with one of those seats earmarked for Peltz.
