Wall Street Declines Amid Middle East Tensions and Inflation Concerns

Market Report: S&P 500 Hits Lowest in Six Months Amid Ongoing U.S.-Israeli Conflict

Key Figures:

• S&P 500: closed at 6,506.48 points, its lowest level since September
• Nasdaq: declined 2.01% to 21,647.61 points, down almost 10% from its record high close on October 29
• Dow Jones Industrial Average: declined 0.96% to 45,577.47 points
• Russell 2000 index: dropped 2.26%, leaving it down 10% from its record high close on January 22

Market Analysis:

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The U.S.-Israeli conflict in the Middle East showed no signs of easing, with the U.S. military deploying an amphibious assault ship to the region. This has deepened concerns about inflation and the potential for higher interest rates. As a result, the S&P 500 closed at its lowest level in six months, while the Nasdaq and Dow Jones Industrial Average also declined.

Sector Performance:

• Utilities: declined 4.11%
• Real Estate: lost 3.15%
• Energy: near flat for the day, but logged its 13th straight weekly gain

Derivatives Expiry and Volume:

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The simultaneous expiry of derivatives contracts tied to stocks, index options, and futures, known as "triple witching," led to heavy volume on U.S. exchanges. A total of 27.5 billion shares were traded, compared to an average of 20.1 billion shares over the previous 20 sessions.

Company News:

• Super Micro Computer: tumbled 33% after three people associated with the artificial intelligence server maker were charged with smuggling at least $2.5 billion of AI technology to China
• Dell: advanced as rival Super Micro Computer declined
• FedEx: issued upbeat forecasts and said global demand was holding steady despite geopolitical tensions, sending its shares up almost 1%

Fed Rate Expectations:

U.S. rate futures show the Fed is more likely to raise interest rates than cut them by the end of 2026, according to CME's FedWatch tool. The Fed's decision is driven by higher inflation expectations, which relate back to the elevated oil price due to the ongoing conflict.