Global markets faced a downturn on Friday as oil prices surged, raising inflation concerns ahead of the US Federal Reserve’s interest rate decision. Brent crude settled near $117 a barrel due to escalating Middle East tensions, which threatened to disrupt supplies. The S&P 500 and Dow Jones Industrial Average both declined, with the latter falling 1.2%. Treasuries also gave up some of their previous gains, reflecting investor caution.
Bank of America’s Michael Hartnett warned that a risk-off mood is likely to persist into November, citing uncertainties around AI-driven stocks and upcoming midterm elections. The recent sell-off in AI-linked shares highlights how crowded trades can suffer sharply when sentiment shifts. Brian Jacobsen of Annex Wealth Management advised investors to rebalance portfolios to manage risk without predicting market moves.
Despite the volatility, some analysts remained optimistic about equities. Ulrike Hoffmann-Burchardi at UBS noted that strong AI demand and attractive bond yields should continue supporting stocks. Tiffany Wilding of Pacific Investment Management Co. suggested the Fed may take a measured approach to rate adjustments, given that inflation is elevated but not accelerating.
Corporate news included SpaceX’s plans to secure 80,000 cell sites in the US, Apple’s quick sell-out of its new iPhone Duo, and American Express’s global headcount reduction. In commodities, West Texas Intermediate crude rose 4.2% to $103.63 a barrel, while spot gold fell 0.6% to $3,999.56 an ounce. Cryptocurrencies saw Bitcoin little changed at $81,178.51, and Ether rose 0.5% to $2,390.75.