US Stocks Mixed as Crude Surges on Middle East Tensions

US equity indexes traded in mixed fashion on Friday, with the Dow Jones Industrial Average falling 1% to 52,349.6 and the S&P 500 slipping 0.2% to 7,645.1 after midday. The Nasdaq Composite bucked the broader trend, rising 0.1% to 26,035.1. This divergence highlighted a market where rising energy costs and geopolitical risk weighed on general risk appetite, even as technology stocks held firm.

The pressure on the broader market was driven by escalating tensions in the Middle East, which sent crude oil prices sharply higher. The front-month West Texas Intermediate crude oil contract jumped 3.6% to $103.11 per barrel, while the global benchmark Brent crude advanced 3.4% to $117.01 per barrel. These gains in energy costs directly impacted sector performance, with energy, real estate, and technology becoming the only sectors to post gains. All other sectors declined, led by weakness in industrials and materials.

The catalyst for the oil spike included intensified fighting between Iran-aligned Houthis and Saudi Arabia. Reuters reported that Saudi Aramco ordered the evacuation of its headquarters in Dhahran, located on the Gulf near Bahrain, as the conflict escalated. Additionally, the UAE Ministry of Climate Change and Environment announced that an oil spill from a tanker was detected off the coast of Umm Al Quwain in the United Arab Emirates. The ministry did not identify the cause of the spill or the specific tanker involved.

Derek Holt, head of capital market economics at Scotiabank, attributed the market sentiment to a combination of factors in a note. Holt cited Iranian attacks on ships in the Strait of Hormuz, Houthi attacks on Saudi interests, and Iran's threats to escalate retaliation. He also pointed to President Donald Trump's statement from a week ago urging to "finish the job" as a contributing element to the prevailing anxiety.

Despite the geopolitical noise, large-cap technology stocks demonstrated resilience. Data compiled by Finviz showed that fifteen of the top 20 performing stocks in a category with a market capitalization exceeding $200 billion were from the technology sector. This strength in tech helped support the Nasdaq Composite even as other parts of the market retreated.

Fixed income markets also reflected the shifting risk landscape, with US Treasury yields rising after midday. The two-year yield gained 5.1 basis points to reach 4.69%, while the 10-year yield added 3.3 basis points to hit 4.99%. The 30-year rate also moved higher, advancing 2.3 basis points to 5.31%. Separately, economic data indicated continued momentum in the industrial sector. S&P Global's October flash reading of manufacturing conditions rose to 56.0 from 55.9 in September, surpassing the 55.5 forecast in a Bloomberg-compiled survey and marking an expansion to a 53-month high.