Major stock indexes on New York Stock Exchange in the United States rose on Friday as investors weighed fresh economic data and the impact of the ongoing Iran–Israel conflict on global markets.
The gains followed heavy losses in the previous session as traders assessed signals about inflation, economic growth and the likely path of interest rates set by the Federal Reserve.
By mid-morning trading, the Dow Jones Industrial Average had risen zero point four two percent, while the S&P 500 climbed zero point four three percent and the Nasdaq Composite advanced zero point four zero percent.
The rebound came as investors analyzed a series of U.S. economic reports released earlier in the day.
Data from the U.S. Department of Commerce showed that consumer spending increased zero point four percent in January, slightly above expectations, while inflation remained firm.
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The Personal Consumption Expenditures (PCE) index — the Federal Reserve’s preferred inflation gauge — showed underlying price pressures remaining elevated.
Despite the data, market expectations for interest rate cuts changed little. Traders now anticipate the Federal Reserve could deliver one quarter-percentage-point rate cut later this year, according to market pricing data.
Analysts say the persistence of inflation could prompt policymakers to keep interest rates higher for longer.
At the same time, geopolitical tensions have added to market uncertainty.
Oil prices have surged amid escalating hostilities in the Middle East, hovering near one hundred dollars per barrel, raising concerns that higher energy costs could feed into inflation and slow economic growth.
Efforts to stabilize oil markets, including emergency supply releases coordinated by the International Energy Agency, have so far failed to significantly ease price pressures.
The conflict has also rattled global financial markets and contributed to volatility across sectors.
In corporate news, shares in Adobe dropped six point five percent after the company said longtime chief executive Shantanu Narayen would step down once a successor is appointed.
The announcement raised fresh questions about the company’s strategy as it faces increasing competition and disruption linked to artificial intelligence technologies.
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Meanwhile, shares in Meta Platforms slipped one point eight percent following reports that the company had postponed the launch of its new artificial intelligence model known as “Avocado” until at least May.
The state of travel stocks on Wall Street
Travel stocks, which have been sensitive to rising fuel prices and geopolitical risks, showed mixed performance.
Shares of American Airlines edged down zero point six percent, while Carnival Corporation rose two point seven percent and Norwegian Cruise Line Holdings gained one point five percent.
Elsewhere, concerns about credit markets continued to weigh on investor sentiment after several major financial firms took steps to limit activity in private credit funds.
Earlier this week, Morgan Stanley halted redemptions in one of its private credit funds, following similar moves by BlackRock and Blue Owl Capital.
Meanwhile, JPMorgan Chase has restricted lending to private credit players, while Blackstone has faced rising redemption requests.
Despite Friday’s rebound, major U.S. indexes remain on track for weekly losses as markets grapple with the economic implications of higher energy prices, persistent inflation and geopolitical tensions.
Investors are now closely watching the Federal Reserve’s upcoming policy meeting next week, where policymakers are widely expected to leave interest rates unchanged.
Analysts say the central bank’s outlook will depend heavily on how inflation, oil prices and global economic conditions evolve in the coming months.
Escalating tensions in the Middle East have begun rippling through global financial markets, raising fears of slower economic growth and renewed inflation as uncertainty grips investors.
The turmoil briefly sent oil prices sharply higher amid concerns that the conflict could disrupt shipments through the strategic Strait of Hormuz—a narrow waterway responsible for transporting a significant share of the world’s crude oil supply.
Global equities reacted swiftly. In the United States, the Dow Jones Industrial Average plunged more than 1,200 points during early trading on Tuesday, putting it on course for its steepest single-day loss since April. The selloff spread across sectors, hitting technology, industrial and materials stocks particularly hard as investors moved to reduce risk exposure.
Markets across Europe and Asia mirrored the downturn. Shares in major financial centres from London to Seoul fell sharply as traders reacted to the potential economic fallout from prolonged instability in the Middle East.
Oil markets were initially the biggest focus. Prices surged on fears that escalating hostilities could threaten tanker traffic through the Strait of Hormuz, one of the most critical chokepoints in global energy supply. Any disruption to shipping through the corridor could significantly tighten oil supplies and push prices higher worldwide.
However, oil prices later retreated after assurances from Donald Trump that tanker traffic through the strait would remain protected. His comments helped calm some of the immediate fears of a supply shock, though analysts say the underlying risk remains.
The uncertainty also spilled into other asset classes. Gold prices declined as traders locked in profits after an earlier surge, while cryptocurrency markets also wavered, with Bitcoin experiencing volatility. Meanwhile, U.S. government bond yields rose slightly as investors recalibrated expectations for inflation and monetary policy.
Market strategists warn that prolonged conflict in the Middle East could create a difficult economic environment globally. Higher energy prices would likely push up transportation and production costs, adding pressure to inflation at a time when many economies are already grappling with elevated price levels.
Such a scenario could also complicate the outlook for central banks. Policymakers in the United States and Europe have been trying to balance efforts to control inflation with the need to support economic growth. A sudden spike in oil prices would make that balancing act more challenging.
The Middle East remains central to global energy markets, and disruptions there often reverberate quickly through financial systems. Investors are therefore closely monitoring developments around the Strait of Hormuz, where roughly one-fifth of the world’s oil consumption passes each day.
For now, analysts say markets will remain sensitive to headlines related to the conflict. Even the perception of potential disruptions to energy supply chains can trigger rapid movements in commodity prices, currencies and equities.
As geopolitical tensions continue to unfold, traders and policymakers alike are bracing for further volatility across global markets, with energy security and inflation pressures likely to remain at the centre of investor concerns.
