Stocks fell broadly on Wall Street and oil prices surged on Friday after a US airstrike killed a top Iranian general in Iraq, raising tensions in the Middle East.
The selling, which lost some momentum toward the end of the day, ended a five-week winning streak for the S&P 500 a day after the benchmark index hit its latest record high.
Technology, financial and healthcare stocks accounted for much of the selling. Companies that rely on consumer spending also fell, along with airlines. Several energy stocks got a boost from higher oil prices. Defense contractors also notched gains.
The strike marks a major escalation in the conflict between Washington and Tehran, as Iran vowed “harsh retaliation” for the killing of major general Qassem Soleimani, commander of the Islamic Revolutionary Guard Corps’ Quds Force.
The S&P 500 on Friday dropped 23 points, or 0.7 percent, to 3,234.85, a loss of 0.2 percent from a close of 3,240.02 on Dec. 27.
The Dow Jones Industrial Average on Friday fell 233.92 points, or 0.8 percent, to 28,634.88, nearly flat from 28,645.26 a week earlier. The index briefly dropped 368 points.
The NASDAQ Composite on Friday lost 71.42 points, or 0.8 percent, to 9,020.77, gaining 0.2 percent from a close of 9,006.62 a week earlier.
The Russell 2000 index of smaller company stocks on Friday gave up 5.90 points, or 0.4 percent, to 1,660.87, a drop of 0.5 percent from 1,669.03 on Dec. 27.
The major stock indices were coming off record highs after closing out last year earlier in the week with the best annual performance by the S&P 500 and NASDAQ since 2013.
Investor sentiment has been mostly positive in the past few weeks as concerns about the strength of the US economy and the possibility of further escalation in the US-China trade war eased. Three interest rate cuts by the Fed have also helped steady markets.
However, the market’s relative calm ended with Friday morning’s news that the US had killed Soleimani in an airstrike at Baghdad International Airport.
“We’ll probably see some short-term volatility, but it’s doubtful that it’s going to escalate to something that is a meaningful concern for investors,” Kravetz said.
Energy companies made gains over concerns that a US-Iran conflict could disrupt global supplies and send oil prices higher. Occidental Petroleum Corp rose 2.4 percent and Hess Corp gained 3.1 percent.
A surge in oil prices helped pull down airline stocks and drove up shares in defense contractors.
American Airlines Group Inc dropped 5 percent, United Airlines Holdings Inc slid 2.1 percent and Delta Air Lines Inc lost 1.7 percent.
Meanwhile, defense contractors Northrop Grumman Corp climbed 5.4 percent, Raytheon Co rose 1.5 percent and Lockheed Martin Corp gained 3.6 percent.
Investors bid up Lamb Weston Holdings Inc after the frozen foods supplier’s fiscal second-quarter earnings and revenue beat Wall Street analysts’ forecasts. The stock was the biggest gainer in the S&P 500, vaulting 11.3 percent.
Tesla Inc climbed 3 percent after the electric vehicle maker reported a 50 percent increase in deliveries last year.
Additional reporting by staff writer
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