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Stocks - Middle East Tensions Sink a Wall Street Rally

Stock MarketsJul 19, 2019 05:11PM ET
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Investing.com – What started as a solid stock market rally Friday was mostly wiped out by rising tensions in the Persian Gulf.

The catalyst was a report that Iranian authorities had seized a British tanker passing through the narrow Strait of Hormuz, which connects the Persian Gulf to the Indian Ocean and is a critical passage for global oil supplies.

Crude oil prices surged in New York and London, creating worries enough to pull stocks back. West Texas Intermediate crude oil closed at $55.63, up 33 cents, but was trading higher still in the aftermarket.

The S&P 500 finished down 0.6%. The Nasdaq Composite slid 0.7%.

The Dow Industrials ended down 0.25%. But the performance was worse than it looks. A 4% gain in shares of Boeing (NYSE:BA) added nearly 110 points to the blue-chip average by itself. Investors applauded the aerospace giant's decision to take a $5 billion charge to account for costs from the grounding of its 737 Max airliner.

The major averages were down for the week after two weeks of gains. The second-quarter earnings season has started, but many reports failed to impress investors. Even Microsoft (NASDAQ:MSFT), which easily beat fiscal-fourth-quarter estimates and guided higher, struggled on the day.

Still, the S&P 500 is up 18.7% on the year. The Nasdaq has gained almost 22.8%. The Dow is up about 16.4%.

The Dow was up as many as 117 points early in the day, but gave up 186 points between that level and the close. Only eight of the Dow stocks were higher, with Boeing (NYSE:BA) the leader. Boeing was also the fifth-best performer among S&P 500 stocks.

Microsoft (NASDAQ:MSFT), McDonald’s (NYSE:MCD) and Visa (NYSE:V) hit 52-week highs. So, too, did Adobe Systems (NASDAQ:ADBE), Cintas (NASDAQ:CTAS), Costco Wholesale (NASDAQ:COST), Ross Stores (NASDAQ:ROST) and Starbucks (NASDAQ:SBUX).

Interest rates attracted some attention as President Donald Trump called on the Federal Reserve to cut its key rate at its July 30-31 meeting, arguing rates have held back the economy this year. The U.S. 10-Year yield was up slightly on the day to 2.051%. The yield is down 3.5% on the week and 23.8% this year, however.

Traders and investors are just about unanimous the Fed will cut its federal funds rate at this month's meeting. Investing.com's Fed Rate Monitor tool puts the odds at 100%, with a second rate cut coming at its Sept. 18 meeting.

Industrial, energy and materials stocks were the strongest sectors on Friday.

Real estate, utilities and communications services were the weakest sectors.

Next week will produce a flood of earnings reports that will be heavy on banks, but it will also include some of the biggest tech names: Facebook (NASDAQ:FB) on Wednesday and Amazon.com (NASDAQ:AMZN), Google parent Alphabet (NASDAQ:GOOGL) and Intel (NASDAQ:INTC) are all on Thursday.

Winners and Losers Among S&P 500 Stocks

State Street (NYSE:STT), Citizens Financial Group (NYSE:CFG and railroad operator Kansas City Southern (NYSE:KSU) were among the top S&P 500 performers.

Alliance Data Systems (NYSE:ADS), Gilead Sciences (NASDAQ:GILD) and Symantec (NASDAQ:SYMC) were among the worst performers.

Netflix (NASDAQ:NFLX) was the fifth-worst on the list after a weak earnings report on Wednesday caused investors to flee the stock. It fell 3.1% on the day and 15.6% for the week.

Stocks - Middle East Tensions Sink a Wall Street Rally
 

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Jeff B
Jeff B Jul 20, 2019 12:04AM ET
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yes a manufactured rally at best
Michael Angelo
Michael Angelo Jul 19, 2019 9:45PM ET
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Oh yes, I remember Falkland. They have to ask the help of US satellites, missiles and ask tbe french to stop selling Exocets to the argies, otherwise it would be another Gallipoli.
John Wim
John Wim Jul 19, 2019 9:45PM ET
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You are right!
bomz bomzov
bomz bomzov Jul 19, 2019 9:45PM ET
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United States denied direct assistance to Britain.
bomz bomzov
bomz bomzov Jul 19, 2019 8:59PM ET
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during the Falkland War, Britain was headed by a real heavyweight politician, Margaret Thatcher, and not a band of tearful socialist liberals.
John Wim
John Wim Jul 19, 2019 8:59PM ET
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Very true
John Wim
John Wim Jul 19, 2019 6:17PM ET
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Anyone here remember the Flaklands war?
bomz bomzov
bomz bomzov Jul 19, 2019 6:17PM ET
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I am.
Andrew Hook
Andrew Hook Jul 19, 2019 6:17PM ET
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bomz: now I know why you are so backward. You are just old and frustrated. MAGA my
bomz bomzov
bomz bomzov Jul 19, 2019 6:17PM ET
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Andrew Hook I should be old if I remmeber Stalin
William Ray
William Ray Jul 19, 2019 4:56PM ET
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The fact is the Fed is horrified to cut at the Corporate Debt level but they know from money flows that people are running, so they are going to cut when the market is making new highs.
Joe Hickey
Joe Hickey Jul 19, 2019 4:37PM ET
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Let's see if the British have any *****to stand up to Iran on this or will just continue to drink tea with their pinky finger sticking out.Get a backbone UK!
Paul Murray
Paul Murray Jul 19, 2019 4:37PM ET
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Says the yank.
Brady Murray
Brady Murray Jul 19, 2019 4:37PM ET
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The Brits generally have taekne a hard stance in line with US policy. They dont mess around.
Louis Winthorpe III
Louis Winthorpe III Jul 19, 2019 4:26PM ET
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I think it had more to do with the Fed statement regarding 25 bpts cut in lieu of 50 bpts
Sam Mojtabai
Sam Mojtabai Jul 19, 2019 4:26PM ET
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Yea sir
 
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