U.S. stock markets finished Friday with mixed results as traders continued to grapple with new geopolitical uncertainty in the Middle East and further cycles in oil and currency markets. The Dow Jones Industrial Average added 38.47 points, or 0.1%, to end at 42,210.13. The S&P 500, on the other hand, slipped 0.21%, while the Nasdaq Composite sank more deeply by 0.49%.
Investor sentiment took on a cautious tone as President Donald Trump postponed taking military action in the wake of recent flare-ups in the Israel-Iran conflict. Markets began the day on a positive note, but worries about what could unfold over the weekend contributed to choppy trades and late-session declines.
Energy prices also signaled the market’s unease. Brent crude dropped 2.3 percent to $77.01 a barrel, but it was still up 3.6 percent for the week. U.S. crude futures settled at $74.93, down 0.28%, but still up 2.7% for the week, despite a holiday-thinned session on Thursday.
“People are holding back from major moves ahead of the weekend. There’s still a lot of risk tied to how the situation unfolds,” said Rick Meckler of Cherry Lane Investments.
Diplomatic Moves and Geopolitical Risks:
The United States forged ahead with targeted sanctions on enterprises tied to Iran’s defense industry, a diplomatic strategy from the White House. But analysts warn that with Israel and Iran continuing to trade hostilities, any miscalculation would see the crisis ratchet higher and put vital oil infrastructure at risk.
“There’s always a chance of an unintended spark in these kinds of conflicts,” said John Evans, an analyst at PVM Oil Associates.
European officials called on Tehran to resume negotiations over its nuclear ambitions after a high-level meeting in Geneva ended without progress. European stock markets closed slightly higher, buoyed by optimism from earlier Asian trading sessions.
The MSCI World Index was down slightly by 0.01%, while gains in Hong Kong and Seoul helped balance out losses in the other Asian markets.
Fed Talk Spotlights Policy The Gap:
Federal Reserve officials spoke publicly for the first time since comments by the Fed’s chair, Jerome H. Powell, on Wednesday, indicating that the central bank is likely to cut interest rates this year. But he cautioned that inflation, particularly from Trump’s trade tariffs, is a risk.
A divide among policymakers is also now visible. Governor Christopher Waller insisted to open the door to a rate cut as soon as the next meeting, and Richmond Fed President Tom Barkin countered that there’s no rush to move. Powell, for his part, warned against putting too much stock in forecasts in such a dynamic environment.
Waller’s dovish take sent bond markets into motion. The yield on the benchmark 10-year Treasuries fell 2 basis points to 4.375%. Strong safe-haven demand, which has been soaring in recent weeks because of global tensions, was another factor contributing to the fall.
Currency and Commodity Price Movements
The dollar was stronger, reaching a three-week high against the yen. A gauge of the dollar against major currencies inched 0.03% higher on the day and 0.6% for the week. The euro was 0.3% firmer at $1.1528.
Gold prices were down 0.13% at $3,365.91, set for a weekly decline despite some strength earlier in the week as a safe haven asset.
