Stocks fell around the world, while bonds climbed with gold on concern the Israel-Hamas war will escalate into a wider conflict in the Middle East. Oil pulled back after hitting US$90 a barrel.

The S&P 500 dropped over one per cent, notching its worst week in a month. The gauge breached the key 200-day moving average — a move seen by some chartists as a harbinger of more losses. Megacaps sold off, with Tesla Inc. seeing its biggest weekly slide since December. American Express Co. tumbled more than five per cent on disappointing volumes on its cards. Regions Financial Corp. led losses in banks after warning of further declines in net interest income.

Traders continued to seek haven amid the latest geopolitical developments. Treasury yields pared weekly increases that pushed the 10-year rate to almost five per cent. Gold edged closer to $2,000 an ounce.

“The ongoing situation in the Middle East has triggered a surge of volatility in the oil and stock markets, compelling investors to re-evaluate their strategies and shift their focus from riskier assets to ‘safer’ investments,” said Fawad Razaqzada, market analyst at City Index and Forex.com.

Hamas released two American citizens who had been held captive in Gaza. Leaders from around the region are heading to Cairo for a Saturday summit on the crisis. Israel’s military said it struck Hamas targets in Gaza overnight. Israel also responded to fire from Lebanon by hitting Hezbollah assets, and evacuated residents near the border. The Iran-backed militant group said it fired guided missiles at several Israeli sites.

Aside from the Middle East crisis, global markets have been whipped around in recent weeks by climbing Treasury yields and growing worries about interest rates staying elevated for longer.

Federal Reserve Bank of Cleveland President Loretta Mester said the U.S. central bank is close to wrapping up its tightening campaign if the economy evolves as expected.

Corporate Earnings

Traders also waded through a raft corporate earnings. Of the 86 companies in S&P 500 that have announced results through Friday morning, 74 per cent beat analysts’ profit estimates, compared with 78 per cent for the whole season a year ago, according to data compiled by Bloomberg.

Individual shares reacted to earnings announcements in the week or so since Corporate America started reporting results. But conflict in the Middle East and elevated Treasury yields have taken precedence, causing S&P 500 constituents to increasingly move in unison as global events sway markets broadly. 

In half the trading sessions since Oct. 13, when the reporting cycle kicked off, at least 400 members in the S&P 500 have moved in the same direction. It’s a frequency that didn’t appear once in comparable weeks the past three earnings periods.

While the S&P 500’s declines this week have appeared largely orderly, the nearest futures contracts tied to the Cboe Volatility Index — also known as the VIX and a measure of expected swings in America’s benchmark equity gauge — closed Thursday in a pattern known as backwardation. It’s a telltale sign of mounting distress, as traders anticipate more volatility in the near-term than further out in the future.

Corporate News

• SLB, the biggest oil-services provider, posted its first sequential dip in North American sales since the start of 2021.
• Solar stocks tumbled after SolarEdge Technologies Inc. warned that third-quarter revenue will be well below its guidance, citing “substantial” cancellations and delayed orders.
• Stellantis NV is raising its wage offer to 23 per cent, matching General Motors Co. and Ford Motor Co. as negotiations with the United Auto Workers heat up, people familiar with the discussions said.

Some of the main moves in markets:

Stocks

• The S&P 500 fell 1.3 per cent as of 4 p.m. New York time
• The Nasdaq 100 fell 1.5 per cent
• The Dow Jones Industrial Average fell 0.9 per cent
• The MSCI World index fell 1.1 per cent

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.1 per cent to $1.0593
• The British pound rose 0.1 per cent to $1.2160
• The Japanese yen was little changed at 149.85 per U.S. dollar

Cryptocurrencies

• Bitcoin rose 2.9 per cent to $29,556.5
• Ether rose 2.5 per cent to $1,606.36

Bonds

• The yield on 10-year Treasuries declined eight basis points to 4.91 per cent
• Germany’s 10-year yield declined four basis points to 2.89 per cent
• Britain’s 10-year yield declined two basis points to 4.65 per cent

Commodities

• West Texas Intermediate crude fell 0.7 per cent to $88.75 a barrel
• Gold futures rose 0.6 per cent to $1,991.80 an ounce

This story was produced with the assistance of Bloomberg Automation.