The Dow and US markets closed lower on Friday, as geopolitical worries overshadowed the hopes of interest rate cuts by the Federal Reserve.
The Dow closed down 0.3%, or 69 points, while the S&P 500 and the Nasdaq Composite finished 0.6% and 0.7% lower, respectively. All three stock benchmarks also fell week-on-week.
Geopolitical concerns overshadowed Friday’s market close after Iran seized two tankers — one under the UK’s flag and one operated by a UK company. President Donald Trump told reporters that the United States has “a very close alliance with the UK,” adding that the United States has “a lot of [Navy] ships” in the region.
Oil prices, which had been mildly elevated all day, spiked higher. US oil was last up 1.5% at $56.15 a barrel.
Earlier, Trump said the USS Boxer downed an Iranian drone that came within 1,000 yards of the Navy ship.
Stocks had started the day higher, as investors got excited about the possibility of a bigger-than-expected interest rate cut at the end of the month. New York Fed President John Williams on Thursday said policy makers should take preventative measures at the first signs of economic slowdowns. The market took this to mean that a bigger interest rate cut was on the way.
Expectations of a half-percentage-point cut at the Fed’s next meeting in two weeks more than doubled to 60% in response. Treasury yields and the US dollar slipped. But then a spokesperson clarified that Williams wasn’t making any predictions about the Fed’s monetary policy update due in two weeks. Expectations for a half-point cut retreated on Friday.
In the latest attack on Fed policy, President Donald Trump tweeted that he preferred Williams first statement, calling it “100% correct that the Fed ‘raised’ far too fast and too early.”