U.S. stocks fell Friday and investors moved into bonds, gold and other haven assets as rising tensions in the Middle East added to concerns over growth and trade.
The Dow Jones Industrial Average fell 64 points, or 0.2%, to 26041 shortly after the opening bell. The S&P 500 also dropped 0.2% and the Nasdaq Composite declined 0.4%.
In Europe, the Stoxx 600 was down 0.7%. That followed a downbeat session in Asia, with indexes in China, Korea and Hong Kong lower. However, Japan’s Nikkei climbed 0.4%.
American shoppers ramped up their spending in May, a boost to the economy this spring. Retail sales, a measure of purchases at stores, restaurants and online, increased a seasonally adjusted 0.5% in May from a month earlier, the Commerce Department said Friday.
The release is the last major U.S. economic report before a meeting of the Fed’s policy-making committee next week.
Late Thursday, the U.S. said Iran was behind an attack on two oil tankers in the Gulf of Oman that sent oil prices soaring. That added to an already tense situation in the crucial shipping channel after an attack on four other tankers in May. Iran denied involvement in the attacks.
Gold prices hit a 14-month high before paring back slightly, with spot gold recently up 0.6% at $1,351 a troy ounce.
Thursday’s attack boosted fears of a broader military conflict in the Persian Gulf which could disrupt oil shipments.
Oil prices stabilized Friday, with Brent crude flat at $61.78 a barrel, after the International Energy Agency said oil demand would likely cool as global economic growth slows.
Falling U.S. Treasury yields were a clear sign that investors were concerned about the risks presented by a standoff in the Persian Gulf, said Geoffrey Yu, head of the U.K. investment office at UBS Wealth Management.
“You’ve got the potential to drive inflation higher at least in the short term, yet Treasury bonds yields are lower. When that diverges it is a clear sign of demand for safe haven assets,” he said. “This is the safety flow overwhelming any other sources of market risk such as higher inflation.”
The rise in oil prices helped support global stocks Thursday. The S&P 500 and Dow Jones Industrial Average both closed 0.4% higher, as rising energy company shares helped the U.S. indexes snap a two-day losing streak.
Markets are “still reverberating to the tune of trade tensions between the U.S. and China and now geopolitical tensions following the attacks” in the Gulf of Oman, said Kit Juckes, global macro strategist at
Oil prices “have settled down a bit but it hasn’t taken tension out of financial markets,” he added.