US stocks stall on caution and geopolitical risks
On Wednesday, US stocks were under pressure as traders reacted to the developments in the Middle East, where tensions have fueled demand for safe-haven assets. Additionally, yesterday’s retail sales data re-affirmed the resilience of the US economy, giving more weight to the Federal Reserve’s tight monetary policy and the risk of seeing interest rates remain high for longer.
However, the energy sector continued to see gains, driven by the surge in oil prices as the ongoing conflict in the Middle East continues to pose a potential threat to oil supplies. This has benefited and could continue to support energy firms like Chevron, Exxon Mobil, and Occidental Petroleum.
On the other end of the spectrum, the airline industry has been affected by the energy price surge, recording significant daily losses. United Airlines announced that the increased cost of jet fuel and a halt in flights to Israel due to the tensions in the Middle East could impact its profits for the last three months of the year.
The major US indices could continue to see some risks and an unclear direction, primarily due to geopolitical tensions and concerns about monetary policy, overshadowing the positive earnings reports of the past two weeks. The market could react with some volatility to the job market and manufacturing data and the comments from Jerome Powell tomorrow.