Stocks plummet after US airstrike against Iran

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Stock Market Update Sunday, January 5th, 2020

Last week was a bit of a roller coaster ride.

On Monday, stocks pulled away from record highs, most likely because of profit taking after such a strong year (S&P up 28.9%).

And on Tuesday, the last day of trading in 2019, stocks finished slightly higher.

Markets were closed on Wednesday for New Years.

Then stocks kicked off 2020 with a bang on Thursday, with a big rally led by tech stocks and new record highs.

But Friday was another story. 

Markets were jolted after news that the U.S. killed an Iranian general with a airstrike in Iraq.

The U.S – Iran tensions sent stocks lower. And with losses on Friday, stocks erased Thursday’s great start to the new year.

Here’s what trader were focused on last week:

  • Trade – The week started with traders focused on trade. Traders were feeling good about relations between the U.S. and China after President Trump announced that a Phase One trade deal would be signed in the U.S. on January 15th. The deal would then be followed by a trip to Beijing to begin Phase Two talks.
  • Iran – The airstrike that killed Iranian general Qasem Soleimani was the biggest news of the week. In a speech President Trump said that Soleimani was an “imminent threat” and that the order to kill Soleimani was in an effort to “avoid a war” not start a war. But tensions in the region quickly escalated with Iran threatening to retaliate. And over the weekend Iraq’s parliament passed a resolution calling for the end of US troop presence in the country, saying that the airstrike was a violation of their sovereignty. The White House announced that 3,500 troops were being deployed to the Middle East. 
  • Santa? – This year’s Santa Claus rally came true. In spite of Friday’s drop, the S&P finished higher by 0.4% during the 7-day trading period marked by the end of December and the first two trading days of January.

Here’s where the major indices ended the week:

  • The S&P finished with a 0.2% loss. Down 5 points, the S&P ended at 3,235.
  • The DOW ended flat. Down just 10 points, the DOW closed at 28,635.
  • The NASDAQ was up 0.2%. With a 19 point gain, the NASDAQ finished at 9,025.

Crude Oil (CL) was up almost 3% on Friday because of tensions in the Middle East. With a 2.1% gain, CL ended the week at $62.98 with its 5th winning week in a row.

In a flight to safety, metals were up after the news. Gold (GC) rallied 1.5% on Friday and was up 2.2% for the week. Friday’s 1551.7 close was the highest weekly close for Gold in almost 5 1/2 years.

And airline stocks tumbled over concerns about rising fuel costs. United Airlines (UAL) dropped 2.1% on Friday, Delta (DAL) lost 1.7% and American Airlines was down 5.0%.

The Fed Minutes from December’s meeting were released on Friday. But there wasn’t much of a reaction. The minutes just confirmed what we already know, that the Fed believes current policy is appropriate and that rates will remain unchanged for some time (most likely through 2020).

Tesla (TSLA) had a nice day on Friday, up 3.0% after beating delivery estimates.

This upcoming week is the first full trading week of 2020. Traders will continue to monitor tensions in the Middle East. We also have December’s Jobs Report released on Friday.

Here is the economic calendar for the week:

Real Time Economic Calendar provided by Investing.com.

This Stock Market Update was provided by Rockwell Trading Services LLC.


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