U.S. stock markets declined on Friday, October 23, as oil prices surged to five- and six-month highs amid mounting tensions between the United States and Iran. The Dow Jones Industrial Average fell 652 points, or 1.2 percent, while the S&P 500 tumbled 0.5 percent and the Nasdaq edged down 0.2 percent, following the technology-heavy index's worst day since June earlier in the week.
Oil prices climbed sharply on geopolitical concerns. Brent crude, the international benchmark, jumped nearly 4 percent to settle between $116.24 and $116.72 a barrel—levels not seen since early May or six months prior. West Texas Intermediate crude rose between 2 percent and 2.9 percent, breaking above and closing just above $100 per barrel. The price increases followed reports that the U.S. and Israel have drawn up plans for renewed strikes on Iran following the November 3 midterm elections, according to the New York Times. Iran's Secretary of the National Security Council said the nation was preparing for fresh attacks, while U.S. non-emergency embassy personnel were ordered to leave Saudi Arabia after attacks on the country's airports and oil fields.
Analysts identified oil as the primary driver of Friday's market losses. As oil prices climbed, concerns about prolonged Middle East conflict weighed on risk assets at a time when equity markets were already fragile following Thursday's sell-off in technology stocks. The national average gasoline price rose to $4.29 a gallon, roughly $1.22 higher than a year earlier. A refinery outage in the Chicago area is expected to push diesel prices even higher in the Midwest, with one energy adviser warning of $5 gasoline prices in Michigan, Ohio, Minnesota, Illinois, and Indiana.
Stock market weakness also reflected persistent investor anxiety about technology sector spending. Major companies including Tesla and Meta reported substantial artificial intelligence capital expenditure plans, triggering concerns about returns on massive spending with limited near-term results. Shares of CoreWeave, a major AI cloud provider, fell 2.5 percent on Friday after declining more than 10 percent the previous day. Some chip stocks rebounded modestly, with the iShares Semiconductor ETF gaining 1 percent and AMD and Micron rising 1.7 percent and 2.5 percent, respectively, after shedding 6 percent Thursday.
Broader economic indicators added to investor caution. Consumer sentiment fell to a five-month low in October according to the University of Michigan, with economists citing the impact of higher interest rates and elevated gas prices. Year-ahead inflation expectations rose to 4.7 percent in October, up 0.1 percentage points. The 10-year U.S. Treasury yield ticked up to around 4.98 percent on Friday after dipping below 5 percent for the first time in a month Thursday, while the 30-year fixed mortgage rate stood at 7.32 percent.
Markets look ahead to a consequential week. Traders await earnings results from major technology companies including Alphabet, Microsoft, Amazon, and Intel, alongside the Federal Reserve's interest rate decision on Wednesday. The central bank is widely expected to hold rates steady, though December rate-hike odds remain elevated at approximately 71 percent. Brent crude posted its third consecutive week of gains, reflecting sustained market concern about Middle East supply disruptions amid the geopolitical standoff.
