Markets rise as Middle East war fears cool

Dow bounces back 322, advancers over decliners 3-1 & NAZ went up 97.  The MLP index fell 2 to the 282s while oil stocks were sold & the REIT index rose 3+ to the 433s.  Junk bond funds were mixed & Treasuries had more selling, driving yields higher (more below).  Oil tumbled 3+ to the low 68s after Israeli airstrikes spared Iran's oil facilities (more below) & gold was steady at 2754 (in record territory).

Dow Jones Industrials

US crude oil sold off steeply, putting the benchmark on pace for its worst day in more than 2 years after Iranian energy facilities were not damaged during an Israeli attack over the weekend.  Futures for global crude benchmark Brent slid 5.9% to $71.53 per barrel while US West Texas Intermediate futures dropped 6.3% to $67.29 per barrel.  US crude oil is on pace for its worst day since 2022, when prices fell 7.9%.  Israel on Sat attacked Iran's military installations in 3 provinces in response to Tehran launching ballistic missiles against Israel on Oct 1.  Iranian news agency Tasnim reported that the attack, which the state-owned Islamic Republic News Agency said killed 4 soldiers, had inflicted “limited” damage.  The strike steered clear of oil, nuclear & civilian infrastructure locations.  Iranian oil news network Shana said that Iran's oil industry operation is “underway normally” with no disruptions.  For weeks, markets had braced themselves for an Israeli retaliation following the direct Iranian offensive against the Jewish state earlier this month.  Broader Middle East tensions have continued to rise following the attack on Israel by Iran-backed Hamas on Oct 7 last year.  Oil markets' key consideration had been a direct engagement between both parties, with concerns of an attack on Iranian oil facilities rising in recent weeks.  Iran accounts for up to 4% of global oil supplies.

U.S. oil on pace for worst day in two years after Israel spares Iran crude facilities

Boeing (BA), a Dow stock, launched a stock offering that could raise up to $22B as the planemaker looks to strengthen its finances squeezed by an over month-long strike by its workers & preserve its investment-grade credit rating.  The move will boost its battered finances, which have worsened since roughly 33K of its workers represented by the machinists union walked off their jobs in Sep, halting production of models including its cash-cow 737 MAX aircraft.  The company is offering 90M in common stock & $5B in mandatory convertible securities.  “The offering is certainly favorable for credit quality. We’ll factor it into our assessment of the rating in the context of continued negative free cashflow,” said Ben Tsocanos, aerospace director at S&P Global Ratings.  BA has never fallen below the investment-grade rating.  If the primary offering is oversubscribed, the company has an option to issue 13.5M shares more & can increase the mandatory convertible offering by another $750M.  BA stock fell 55¢.

Boeing to raise up to $22 billion to shore up finances, stave off downgrade

The yield on the 10-year Treasury continued its ascent, after hitting a 3-month high last week.  The 10-year Treasury yield rose 1 basis point to 4.24%, while the 2-year Treasury added around 1 basis point to 4.105%.  Yields move inversely to prices & 1 basis point equals 0.01%.  The yield on the 10-year Treasury hit a 3-month high on Wed, topping 4.25%, before dipping slightly to close out the week.  Investors will also continue to digest a slew of central bank commentary following last week's IMF meetings in DC with Federal Reserve policymakers now in a blackout period which prevents commentary ahead of next week's interest rate decision.

Treasury yields continue their ascent after hitting a 3-month high last week

The market was bolstered by relief that Israel limited its retaliatory strikes on Iran to military targets & not oil or nuclear facilities as feared.  This will also be an important week for earnings.