Wall Street’s major indexes fell from record highs on Friday after the attack on Soleimani ratcheted up tensions in the Middle East and a bigger-than-expected contraction in the US manufacturing sector raised concerns of slowing economic growth.

Friday’s decline put the benchmark S&P 500 in the red for the week, snapping a five-week winning streak for the index. Demand for safe-haven assets soared as Iran vowed revenge for the killing of Soleimani, head of its elite Quds Force, in an air strike authorised by US President Donald Trump.

In a further blow to US market sentiment, data from the Institute for Supply Management showed that US factory activity contracted in December by the most in more than a decade. S&P 500 bank stocks dropped 1.6 per cent as the news sent benchmark US bond yields to their lowest since 12 December.

Shares of airlines also tumbled as oil prices jumped about 3 per cent. American Airlines Group Inc shares dropped 5.0 per cent, while shares of United Airlines Holdings Inc fell 2.1 per cent. Among the S&P 500’s 11 major sectors, only real estate and utilities – both considered defensive plays – ended higher. In a sign of investor jitters, US stocks extended their fall following a false report of an attack on a US military base in Iraq.

Morning-Market-Note-Monday-6th-January

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