Stocks entered a second day of consolidation following the massive rallies earlier this week. In part, this is the natural market action one would expect as investors reassess and rebalance their portfolios. The modest decline also reflects the continued uncertainty surrounding developments in the Strait of Hormuz.
On the one hand, the Houthis, who are backed by Iran, launched missiles at a government military camp. On the other hand, Iran reportedly threatened to attack regional energy infrastructure if it were attacked. As a result, oil prices rebounded slightly to reflect the possibility of further escalation.
The Dow Jones Industrial Average declined by 464 points to 53,885. The Nasdaq remained largely flat at 26,348, while the S&P 500 slid 0.18% to 7,710. Energy, communication services, and healthcare were the only sectors to end the day in positive territory.
The bond market saw considerably more activity, with the five-year U.S. Treasury yield rising 74 basis points to 4.39% and the 10-year yield rising six basis points to 4.68%. The increase in fuel prices explains only a small portion of the movement. Instead, Alphabet’s massive bond sale to fund its AI spending is more likely to be the culprit, as its capital needs add to the supply of bonds in the market.
Today’s jobless claims report continued to show stability in the labor market, while the wholesale inventories report showed growth that was mostly in line with expectations. Notably, U.S. productivity grew at an annualized rate of 1.4%. However, this data series tends to be volatile, and we will need additional observations before establishing a trend.
Tomorrow, we will finish the week with the employment report. Adams Wealth Advisors will return to summarize the week.