The biggest story that dominated the markets on Thursday was Israel’s limited retaliatory strike on Iran, leading to a spike in oil futures and a drop in stock index futures. However, as more details emerged, the markets calmed down, with crude oil futures down just under 1% in premarket trading. Prices for gold and bonds also shifted, with gold futures down .25% and bond yields falling below 4.6%.
The ongoing tensions in the Middle East have added to the market’s overall weakness, with the S&P 500 and Nasdaq Composite both down almost 5% for the month. Volatility, as measured by the VIX, has been increasing and is now hovering just under 19. Additionally, Netflix reported earnings that beat estimates but announced changes in reporting paid membership and revenue per subscriber, causing the stock to drop around 6.5% in premarket trading.
Looking ahead, next week is expected to be a significant one for stocks, as tech giants like Alphabet, Meta Platforms, Microsoft, and Tesla are set to report earnings. It will also be a significant week for economic data, with the Personal Consumption Expenditures (PCE) Index being a highlight. Investors are bracing for heightened volatility as geopolitical tensions, interest rates, and corporate earnings take center stage in the coming days.
Companies in the Defensive sector, such as Lockheed Martin, RTX Corporation, and Boeing, are also scheduled to report next week, providing insights into demand in light of geopolitical circumstances. With the market up over 20% since last April, driven by assumptions of lower interest rates and strong earnings growth, investors are now facing a test of those assumptions. Geopolitical tensions add an additional layer of uncertainty, prompting investors to stay vigilant and stick to their long-term investment objectives.
In conclusion, while markets may not be in imminent danger, the recent events highlight the potential for increased volatility. Investors are urged to stay informed and prepared for possible market fluctuations in the days ahead. The commentary provided by tastytrade, Inc. serves as educational content and is not intended as trading or investment advice. It reminds investors to remain cautious and stay focused on their long-term goals amidst the evolving market landscape.
