As geopolitical tensions intensify, the financial markets are feeling the pressure. The Nasdaq 100, a prominent tech index, has officially dipped into correction territory amidst ongoing conflict in Iran, marking the fifth consecutive week of stock market declines.
The Nasdaq 100 experienced a 2% drop on Friday, bringing it down to approximately 23,138, its lowest point in seven months. This decline represents an 11% decrease from its peak of 26,119 in October, thus satisfying the criteria for a typical stock correction.
The Dow Jones Industrial Average has also entered correction territory, registering a 10% drop from its peak earlier this year and losing over 800 points on Friday. Meanwhile, the S&P 500 is approaching a similar status, having fallen 8% since its February highs.
Major Index Performances
Here’s where major indexes stood at the 4 p.m. ET closing bell:
S&P 500: 6,368.85, down 1.67%
Dow Jones Industrial Average: 45,167.44, down 1.72% (-792 points)
Nasdaq 100: 23,132.77, down 1.93%
The technology sector, in particular, has faced significant challenges over the year, with investor concerns about capital expenditures and the potential negative effects of technology advancements on businesses and the broader economy. A notable sell-off in memory stocks, which had soared earlier in the year, has further weighed down the index.
Market volatility has been exacerbated by the US and Israel’s military actions in Iran, which have driven up oil prices. The rising cost of crude oil poses inflation risks that could hinder economic growth, especially as the US economy shows signs of slowing.
Brent crude surpassed $110 a barrel on Friday, despite a temporary halt in US attacks on Iran’s energy facilities announced by Donald Trump. The strategic Strait of Hormuz remains closed, with reports indicating that Chinese ships have been denied passage by Iran.
“The weekend approaches with war tensions mounting and investors shying from risk,” remarked Joe Mazzola, head trading and derivatives strategist at Charles Schwab. “Major indexes are on pace for the fifth straight lower week, a streak last achieved during the miserable market year of 2022.”
Additionally, the Nasdaq 100 is nearing the ominous “Death Cross” territory, a technical indicator suggesting a bearish trend, as pointed out by Aaron Hill, chief market analyst at FP Markets. “For stocks to gain a footing, oil prices must drop,” he emphasized.
The Nasdaq is on track for its 10th losing week in the last 11 weeks, a pattern seen only in a few other periods throughout its history, noted Paul Hickey, co-founder of Bespoke Investment Group.
