Middle East conflict escalates, crude oil surges more than 5%, tightening concerns resurface, US stocks open high and close low, Nasdaq falls more than 1%, and the entire week ends with a decline.

Three major US banks have kicked off the third-quarter earnings season on a positive note, temporarily dispelling concerns about the impact of a high interest rate environment on the performance of large banks. However, the US stock market failed to make significant gains as escalating Middle East conflicts, rising oil prices, and unexpected increases in US inflation expectations dampened market sentiment.

The bank earnings reports showed that JPMorgan Chase, Citigroup, and Wells Fargo not only exceeded revenue expectations for the third quarter, but also saw better-than-expected growth in their main source of income, net interest income (NII), compared to the same period last year. Following the release of the earnings reports, US stocks opened higher, with major indices rebounding across the board. Bank stocks performed particularly well, with JPMorgan Chase, which saw a 30% YoY increase in NII and reached a historical high, surging by 5% at one point, marking its largest intraday gain in six months. Citigroup and Wells Fargo also saw gains of over 4% in early trading.

The University of Michigan's consumer sentiment index, released in the morning after the earnings reports, showed that consumer confidence in October fell more than expected, marking the largest MoM decline in 16 months. Moreover, consumers' inflation expectations for the next year not only failed to stabilize, but instead rose to a five-month high. Following the release of the inflation expectations data, US stocks continued to decline, with the Nasdaq and S&P 500 both turning negative, led by a decline in technology stocks. In contrast to the previous week's overall gains driven by a strong performance on Friday, the Nasdaq erased its weekly gains and turned negative after a sharp decline on Friday.

The worsening situation in the Middle East on Friday dampened investor risk appetite. The Israeli military requested that one million Palestinians evacuate the northern Gaza Strip, and China Central Television (CCTV) reported that a ground military operation by the Israeli army seemed imminent. This was followed by a statement from the Israeli Defense Forces that Israeli infantry units had entered the Gaza Strip for "localized attacks". CCTV also reported intense clashes between Lebanese resistance forces and Israel along the temporary border between the two countries.

Although the S&P 500 has been declining in recent days, it continued to accumulate gains this week due to the sustained increases in the first three days. The Dow Jones Industrial Average also saw its first weekly gain in a month. These gains in the stock indices were mainly driven by dovish comments from Federal Reserve officials earlier in the week, suggesting that the need for rate hikes could be reduced if US bond yields continue to rise. Timiraos, a reporter from the "New Fed News Agency," hinted in an article that the movement of US bond yields could lead the Fed to continue its pause in rate hikes in November. The minutes of the September Fed meeting revealed internal divisions over rate hikes, and after cautious action became the consensus, Timiraos commented that the rise in US bond yields since the September meeting could replace the Fed's final rate hike.

The tense geopolitical situation in the Middle East led to a rise in safe-haven assets on Friday, with US Treasury prices rebounding and yields falling after a sharp rebound on Thursday. The yield on the benchmark 10-year US Treasury note briefly dropped by more than 10 basis points. The decline in yields was slightly narrowed after the release of US consumer inflation expectations, but overall, yields fell significantly during a week when Fed officials took a dovish stance. The US dollar index staged a rebound for the second consecutive day, although the momentum was not as strong as Thursday when the CPI exceeded expectations. However, it reached a high for the week, reversing the downward trend of the entire week with a two-day rebound. Gold made a big rebound, with New York futures gold rising more than 3% in a single day for the first time since December last year, resulting in the largest weekly increase in nearly seven months.

Gold was not the only big winner among commodities on Friday. Investors were concerned that the escalation of the Israeli-Palestinian conflict would affect major oil-producing countries in the Middle East. International crude oil, which had fallen sharply during Thursday's trading session, rebounded strongly on Friday, with an increase of more than 5% during the trading session. This was the best single-day performance since the outbreak of the conflict between Israel and Palestine on Monday, following the announcement of voluntary production cuts by OPEC+ and other countries in early April.

This week, natural gas in Europe outperformed other commodities. Negotiations between Chevron and the union of an Australian liquefied natural gas (LNG) plant continued on Friday, but no agreement was reached. Union officials said that there were still several sticking points that had not been resolved, and both sides plan to continue negotiations on Monday. The prospects for resolving the threat of a strike by Chevron workers at the LNG plant in Australia remain uncertain. European natural gas continued to rise, although the momentum slowed down, it still rose more than 40% for the week. This was partly due to the disruption caused by the Middle East conflict, which affected Chevron's production in local gas fields and the sabotage of gas pipelines in the Netherlands.

The Nasdaq reversed its upward trend for the entire week on Friday, with the technology sector leading the decline in the S&P 500. Chip stocks underperformed the broader market, and JPMorgan Chase gave back more than half of its gains after the release of its earnings report.

The three major US stock indexes opened higher, with the Dow Jones Industrial Average rising nearly 330 points, or nearly 1%, in early trading. The S&P 500 index briefly rose more than 0.6%, and the Nasdaq Composite index rose more than 0.3%. However, they all fell back later, with the Nasdaq turning negative after more than half an hour of trading, and the S&P 500 also turned negative before the end of the morning session. The Dow Jones experienced several short-term declines during the end of the morning session and the afternoon session. The Nasdaq fell by more than 1% during the afternoon session.

In the end, only the Dow Jones closed higher, up 39.15 points, or about 0.12%, at 33,670.29 points, approaching the high set on September 25 after two consecutive days of record highs on Wednesday. The Nasdaq and the S&P 500 both fell for the second consecutive day after four consecutive days of gains. The Nasdaq fell by 1.23% to 13,407.23 points, hitting a low since October 5. The S&P 500 fell by 0.5% to 4,327.78 points, further away from the high set on September 20 after two consecutive days of record highs.

The Nasdaq 100 index, which is dominated by technology stocks, fell by 1.24%, hitting a low for the week for the second consecutive day and underperforming the broader market. The Russell 2000 index, which is dominated by value stocks, fell by 0.84%, hitting a low since May 4 after three consecutive days of declines.

The major stock indexes had mixed performances this week. The S&P 500 rose by 0.45%, marking two consecutive weeks of gains. The Dow Jones rose by 0.79%, ending three consecutive weeks of declines. The Nasdaq 100 rose by 0.15%, marking three consecutive weeks of gains. However, the Nasdaq, which had risen for two consecutive weeks, fell by 0.18%, and the Russell 2000 fell by 1.48%, marking two consecutive weeks of declines.

In the Dow Jones Industrial Average, UnitedHealth (UNH), a healthcare insurance giant, saw a 2.6% increase in its stock price as its quarterly revenue and profits exceeded expectations. On the other hand, Boeing (BA) fell 3.3% after announcing an expanded investigation into production defects in some of its 737 Max 8 models, second only to Walgreens (WBA), a pharmacy giant, which fell by about 3.9%. WBA saw a 7% surge in its stock price after announcing its earnings report on Thursday.

Among the major sectors in the S&P 500, six sectors saw a decline on Friday. The IT, Meta, and communication services sectors, which include chip stocks, Google, Tesla, and Amazon, all fell by more than 1%. The industrial sector fell by 0.9%, materials fell by nearly 0.4%, and real estate saw a slight decline. Among the five sectors that saw an increase, the energy sector led the way with a more than 2% increase, followed by utilities with a more than 1% increase, and finance with a 0.2% increase, which had the smallest increase.

This week, the non-essential consumer goods sector fell by nearly 0.7%, materials fell by more than 0.4%, and communication services fell by 0.2%, accumulating declines. The energy sector saw a 4.5% increase, performing the best, followed by utilities with a more than 3% increase, real estate with a more than 2% increase, and the industrial sector with a 1% increase. The healthcare sector had the smallest increase of 0.1%.

The leading technology stocks were the main drag on the market on Friday. Tesla fell by 3%, marking a three-day decline and reaching its lowest closing price since October 3. It fell by 3.6% this week. Among the six major FAANMG technology stocks, Meta, the parent company of Facebook, fell by nearly 3%, and Alphabet, the parent company of Google, fell by nearly 1.2%, both reaching their lowest levels since October 5 after a two-day decline. Amazon, which had risen for five consecutive days and reached its highest level since September 20, fell by nearly 2% on Thursday. Netflix fell by 1.5%, marking a four-day decline to its lowest level since May 17. Apple, which had risen for two consecutive days and reached its highest level since September 6, fell by 1%. Microsoft fell by 1%, marking a two-day decline to a weekly low.

These technology stocks saw mixed performance this week, with Netflix falling by nearly 6.8%, Meta falling by more than 0.2%, and Alphabet falling by nearly 0.2%. On the other hand, Amazon saw an increase of over 1.4%, Apple rose by nearly 0.8%, and Microsoft rose by more than 0.1%.

Overall, chip stocks, which had seen a three-day increase, fell behind the overall market and turned into a cumulative decline for the week. The Philadelphia Semiconductor Index and the semiconductor industry ETF SOXX both fell by 2.7%, reaching their lowest levels since October 5, with cumulative declines of 0.6% and 0.7% respectively for the week. By the closing bell, AMD fell by more than 3%, Arm fell by more than 2%, closing below its IPO price for the first time since its listing in mid-September. Intel and Qualcomm both fell by more than 2%, and Nvidia fell by 2%. AI concept stocks fell together. At the close, C3.ai (AI) fell more than 2%, BigBear.ai (BBAI) and Palantir (PLTR) fell more than 3%, Adobe (ADBE) fell nearly 2%, and SoundHound.ai (SOUN) fell nearly 0.6%.

Banking stocks opened high and fell during the day, with regional banking stocks turning from gains to losses throughout the week. The overall banking industry index, KBW Bank Index (BKX), initially rose more than 2% and closed down 0.4%, continuing to fall from the high point since September 29, when it rose for five consecutive days. It rose more than 0.1% this week; the regional banking index, KBW Nasdaq Regional Banking Index (KRX), rose 1% at the beginning and closed down 2%, and the regional banking stock ETF, SPDR S&P Regional Banking ETF (KRE), rose more than 1% at the beginning and closed down nearly 2%, both falling to the low point since October 4 after two consecutive days of decline. They fell by about 2.2% and 1.6% respectively this week.

Regional banking ETF KRE turned down this week after two consecutive days of decline.

Among the major banks that announced their earnings reports, JPMorgan Chase initially rose by as much as 5%, the largest intraday gain since April 14, and closed up nearly 1.6%; Wells Fargo initially rose by 4.7% and closed up nearly 3.1%; while Citigroup initially rose more than 4%, it fell during the afternoon session and closed down 0.2%. Other major banks basically turned down during the day, with Bank of America down 0.5%, Goldman Sachs down nearly 0.2%, and Morgan Stanley down slightly. Among these major banks, only Goldman Sachs and Morgan Stanley fell this week.

Trends of the six major US bank stocks this week.

Popular Chinese concept stocks continued to decline for two consecutive days. The Nasdaq Golden Dragon China Index (HXC) fell more than 1% during the day and closed down 0.9%, with a cumulative decline of 1.8% this week. Chinese concept ETFs KWEB and CQQQ closed down 1.1% and nearly 0.5% respectively. Among individual stocks, at the close, JD.com, Baidu, Bilibili, Weibo, and iQiyi fell more than 2%, Tencent Music, XPeng Motors fell more than 1%, Pinduoduo fell nearly 0.8%, Alibaba fell nearly 0.6%, Li Auto fell 0.5%, while NIO turned up during the day and closed up nearly 0.4%.

Among the stocks with larger fluctuations, discount retailer Dollar General (DG) rose 9.2% after announcing that former CEO Todd Vasos would resume leadership of the company and being upgraded to a buy rating by Gordon Haskett due to optimism about the stability of the company after the leadership change; insurance company Progressive (PGR), whose net written premiums in the third quarter exceeded expectations, rose 8.1%. After falling 2.5% in after-hours trading, Pfizer announced a significant downward revision of approximately $7 billion in revenue expectations for its COVID-19 drug Paxlovid this year. As a result, the company has lowered its full-year performance guidance. Pfizer's stock price fell more than 6% in after-hours trading, while another COVID-19 vaccine stock, Moderna (MRNA), also experienced a drop of over 4%.

In the European stock market, as tensions escalate in the Middle East and energy prices rise, concerns about sustained high inflation have intensified. The pan-European Stoxx 600 index ended its three-day winning streak. The Stoxx 600 index fell from its closing high on September 21. Most major European stock indices also declined, with the French stock market falling for three consecutive days, and the German and Spanish stock markets falling for two consecutive days. The Italian stock market, which had risen for three consecutive days, and the British stock market, which rebounded on Thursday, both retreated.

After raising its full-year sales and operating profit guidance for the third time this year, Danish pharmaceutical company Novo Nordisk rose nearly 1%, leading the Danish stock market to achieve a new historical high for the second consecutive day. Another major blue-chip stock, LVMH, fell 2.1%, hitting an 11-month low. This is the third consecutive day of decline after announcing a slower-than-expected sales growth in the third quarter, with a cumulative decline of about 9.5% this week.

Among various sectors, the technology sector fell more than 2.5% and the tourism sector fell nearly 2.3%, while the oil and gas sector, supported by rising oil prices, rose more than 1% against the trend.

Despite a weekly retreat, the Stoxx 600 index, which had surged nearly 2% on Tuesday, still rose nearly 1% for the week, reversing a three-week losing streak. Stock indices in different countries had mixed performances this week, with the British and Italian stock markets rising more than 1% and ending a three-week losing streak, while the German, French, and Spanish stock markets fell for four consecutive weeks. The Danish stock market performed the best, rising more than 6% for the week, with Novo Nordisk's strong support contributing to a cumulative increase of about 11% this week.

Among various sectors, the oil and gas sector rose more than 6% this week, outperforming other sectors by a wide margin. The healthcare sector, where Novo Nordisk is located, rose more than 2%, while the personal and household goods sector, where LVMH is located, fell more than 3%.

Ten-Year Treasury Yield Retreats Over 10 Basis Points, Ending Five-Week Rally

As risk aversion increases, European government bond prices rebounded and yields fell. At the end of the bond market session, the yield on the 10-year benchmark UK government bond closed at 4.38%, down 4 basis points for the day, while the yield on the 10-year benchmark German government bond closed at 2.73%, down 5 basis points for the day.

European bond yields have fallen significantly this week, reflecting investors' bets that recent comments from officials of the European Central Bank and the Federal Reserve indicate the end of interest rate hikes. The 10-year UK bond yield, which had risen for two consecutive weeks, fell by approximately 19 basis points, while the 10-year German bond yield, which had risen for five consecutive weeks, fell by approximately 15 basis points. The yield on the 10-year US Treasury benchmark bond approached a daily high of nearly 4.70% in early Asian trading, but then retreated. In pre-market trading, US stocks briefly fell below 4.59%, hitting a daily low. The yield dropped by about 11 basis points during the day, and remained far from the low of 4.52% reached on Thursday, which was the lowest since September 29. After the release of US consumer expectations in early trading, the yield stabilized above 4.60% and was around 4.61% at the end of the bond market session, dropping by nearly 9 basis points during the day. It fell by a total of about 19 basis points this week, ending a five-week streak of increases.

The 2-year US Treasury yield, which is more sensitive to interest rate prospects, hit a daily high of over 5.06% in early Asian trading. In pre-market trading, US stocks briefly fell below 5.01%, hitting a daily low. The yield dropped by nearly 6 basis points during the day, but has not yet approached the low of 4.95% reached on Wednesday, which was the lowest since September 8. After the release of consumer inflation expectations in early trading, the yield rose back above 5.05% and was around 5.05% at the end of the bond market session, dropping by nearly 2 basis points during the day. It fell by a total of about 3 basis points this week, giving up most of last week's rebound.

Yields on US Treasury bonds of various maturities fell back this week after rising on Thursday.

The US dollar index, which tracks the exchange rates of the US dollar against six major currencies including the euro, fell below 106.30 in pre-European trading, hitting a daily low. It dropped by nearly 0.3% during the day. European stocks briefly turned higher, and US stocks briefly fell below 106.40 before rebounding. In early US trading, the index approached 106.80, hitting a high in intraday trading since last Friday, and rose by nearly 0.2% during the day.

By the close of US stock trading on Friday, the US dollar index was above 106.60, rising by less than 0.1% during the day. After a streak of 11 consecutive weeks of gains and the longest winning streak since 2014, it rose by about 0.6% this week. The Bloomberg Dollar Spot Index, which tracks the US dollar against ten other currencies, rose by less than 0.1%, reaching a high since October 3 during the same period. It rose by 0.3% this week, marking a four-week winning streak. Both the US dollar index and the Bloomberg Dollar Spot Index rebounded for two days after a five-day decline.

The Bloomberg Dollar Spot Index rebounded this week after a rise on Thursday.

Most non-US currencies fell, with the euro falling below 1.0500 in early US trading, and the British pound approaching 1.2120 in midday US trading, both hitting lows since October 6. At the close of US stock trading, they were hovering around 1.0510 and below 1.2140, falling by about 0.2% and 0.3% respectively during the day. On the other hand, the Japanese yen rebounded after three consecutive days of decline, with the US dollar falling below 149.50 in pre-market trading, hitting a daily low. By the close of US stock trading, it was below 149.60. The offshore renminbi (CNH) against the US dollar approached the 7.30 level in the early Asian session, reaching a daily high of 7.3010. However, it subsequently fell multiple times. In the early US session, it fell below 7.31 to a daily low of 7.3140, a drop of 130 points from the high. The US stock market rebounded slightly in the afternoon session but remained far from the intraday high of 7.27 reached on Tuesday, September 15. At 4:59 am on October 14, Beijing time, the offshore renminbi against the US dollar was reported at 7.3133 yuan, a decrease of 35 points from the New York closing on Thursday. It has fallen for three consecutive days after two consecutive increases, with a cumulative decline of 39 points this week and a decline for two consecutive weeks.

Bitcoin (BTC) rose above $26,900 in the early European and US sessions, approaching the $27,000 level. In the early US session, it fell below $26,700 to a daily low, dropping more than $200 or nearly 1% from the high. At the close of the US stock market, it was above $26,700, with a slight increase of about 0.2% in the past 24 hours. It did not continue to approach the low of $26,600 reached on Wednesday, September 28. It has fallen more than 4% in the past seven days.

Crude oil continued to rise this week, with accelerated gains during the European and American trading sessions, reaching the highest daily increase since April 3, when OPEC+ countries, including Saudi Arabia, announced a voluntary production cut of 1.6 million barrels per day.

US WTI November crude oil futures, which had fallen for three consecutive days, closed up 5.77% at $87.69 per barrel. Brent December crude oil futures, which had stopped the two-day decline, closed up 5.65% at $90.89 per barrel, reaching a high since October 3.

US oil rose 5.92% this week, the largest weekly increase since September 1 and the second largest in six months. Brent oil rose 7.46%, the largest weekly increase since February 10, rebounding strongly after a sharp decline last week. It has risen for five out of the past seven weeks but failed to erase the largest weekly decline since March 17, which exceeded 8% last week.

European natural gas rose for two consecutive days, with a significant easing of gains on Friday, but still recorded a substantial increase of over 40% for the week, reversing the two-week decline. UK natural gas futures closed up 2.05% at 136.7 pence per therm, reaching a closing high since August 22 for two consecutive days, with a cumulative increase of 44.67% this week. Dutch natural gas futures closed up 1.85% at 53.982 euros per MWh, reaching a closing high since February 15 for two consecutive days, with a cumulative increase of 41.2% this week.

London lead fell for the fifth consecutive day to a four-month low, while gold saw a one-day increase of over 3%, marking the largest weekly gain in nearly seven months.

London base metal futures have mostly declined for two consecutive days. London lead has fallen for five consecutive days, reaching a four-month low. London copper, aluminum, and zinc have fallen for two consecutive days, continuing to hit new lows since last Thursday, mid-September, and over a month ago, respectively. London nickel, which had halted its two-day decline on Thursday, fell again and approached the low point since October 2021. On the other hand, London tin, which had fallen on Thursday, rebounded and approached the high point of the past week.

Most base metals have declined this week, with lead leading the way with a drop of nearly 4.8%, falling for three consecutive weeks. Zinc fell by over 2%, while aluminum and copper fell by over 1%, both declining for two consecutive weeks. Nickel fell by about 0.2%, declining for six consecutive weeks, while tin rose by 1.8%, rising for two consecutive weeks, showing outstanding performance for two weeks in a row.

After ending its four-day rally on Thursday, New York gold futures continued to rebound throughout Friday, with the midday gain in US stocks expanding to over 3%. In the end, COMEX December gold futures closed up 3.10%, marking the largest increase since December 1st of last year, at $1941.50 per ounce, reaching the highest closing price since September 22nd, and closing above $1900 for the first time since September 26th.

Thanks to the significant increase on Friday, gold futures have risen by approximately 5.22% this week, marking the largest weekly gain since March 17th and ending the three-week decline.

New York silver futures easily erased the decline that halted its four-day rally on Thursday, with COMEX December silver futures closing up 4.26% at $22.895 per ounce, reaching a high point since September 26th and rising by 5.39% this week after two consecutive weeks of decline.

Spot gold, like gold futures, closed above the $1900 mark on Friday.