Stocks slide as Iran tensions escalate

The stock market faced a challenging end to the week as investors monitored escalating tensions in the Middle East and anticipated future interest rate cuts from the Federal Reserve. The S&P 500 declined 0.22%, closing at 5,967.84, marking its third consecutive day of losses. The Nasdaq Composite also fell, dropping 0.51% to settle at 19,447.41. However, the Dow Jones Industrial Average managed a modest gain of 0.08%, ending at 42,206.82. Chip stocks came under significant pressure following a report suggesting potential U.S. restrictions on some semiconductor manufacturers. This sector saw substantial declines, with major companies suffering losses. The trading session initially began on a positive note after Federal Reserve Governor Christopher Waller indicated the possibility of rate cuts as early as July, despite Fed Chair Jerome Powell’s recent remarks that the central bank would remain cautious and data-dependent. President Donald Trump added to the uncertainty by criticizing Powell for allegedly costing the U.S. economy “hundreds of billions of dollars” by delaying rate cuts. Tensions also remained high regarding the Israel-Iran conflict, with Israeli Prime Minister Benjamin Netanyahu reportedly ordering strikes on strategic targets in Iran. Sam Stovall, chief investment strategist at CFRA Research, highlighted the market’s cautious sentiment. “With so much uncertainty in the world, it’s challenging to take long positions over the weekend,” he said, noting that the S&P 500 is still trading around 3% below its recent 52-week high. For the week, the S&P 500 was down about 0.2%. The Dow eked out a 0.02% gain, while the Nasdaq advanced 0.2%.

Stocks drop amid Iran tensions

Notable activity included several stocks reaching new 52-week highs, with some securing fresh all-time highs. Meanwhile, stocks like Molson Coors and Constellation Brands hit new 52-week lows. In other news, Morgan Stanley suggested that the Federal Reserve’s annual stress test for banks in 2025 would be “less strenuous” compared to 2024, potentially indicating lower stress capital buffers. Ether ETFs saw a resurgence, bouncing back from previous fears of becoming “zombie funds,” with six consecutive weeks of inflows. Despite this, the price of ether remained flat over the past month. JPMorgan recommended buying the dip in Arista Networks, noting that investors were not appreciating its potential upside in the AI networking market. Shares of Arista Networks have lost 18% year-to-date. Circle’s stock continued to climb following the Senate’s approval of the GENIUS Act, a landmark stablecoin bill, spiking 18% on Friday. Among the biggest midday market movers, GXO Logistics saw a significant uptick, rising over 11% after raising its full-year earnings outlook. CarMax also jumped 6% on better-than-expected first-quarter results. GMS witnessed a dramatic 26% surge amid a bidding war between QXO and Home Depot, driving up related building stocks. Building stocks in general gained, with GMS soaring 28% on acquisition interest, and QXO and Home Depot also posting gains following the acquisition news. Friday’s trading wrapped up a week of heightened volatility influenced by geopolitical uncertainties and mixed signals from the Federal Reserve. Investors remain cautious as they navigate the current economic and geopolitical landscape.