Middle East Crisis Drives Market Jitters

0:00On March 22nd, Wall Street investors are zeroing in on the escalating Middle East crisis as the main driver of market jitters. US stocks wrapped up the week with big losses as the S&P 500 nosh'd its fourth straight weekly drop and hit a six month low. The NASDAQ composite fell nearly 10% from its October peak. Tensions boiled over with Iran striking energy sites after an Israeli hit on its gas field, and the US sending thousands of Marines to the region. Oil prices swung wildly, rippling across markets, with US crude settling around $98 a barrel and Brent crude, near $100, $12. Shipping stalled in the straight of Hormuz, a key route for about one-fifth of global oil and natural gas. Data shows a strong inverse link between the S&P 500 and crude prices lately. Traders say oil swings offer the best clue on how markets view the conflict ahead. The energy sector in the S&P has climbed since prices spiked in late February, though

1:00it makes up less than 4% of the index. This pullback feels orderly so far, thanks to solid corporate earnings providing a buffer. Rising treasury yields add another worry, with the 10-year note hitting 4.38%, its highest in nearly a year. Eyes are on whether it breaks 4.3% sustainably, or even 4.5, which could crimp stocks by hiking borrowing costs and, lowering money to bonds. The S&P also did below its 200-day moving average for the first time since May. Looking ahead, economic reports on manufacturing and consumer sentiment take center stage in a quiet week, alongside a big energy conference in Houston. But Middle East developments in Iran will likely dominate, raising odds of drawn out fighting, more infrastructure hits, and sticky high oil prices.