Wall Street stocks fall again as Middle East tensions rise

On Wall Street, major stock indexes opened lower for a second straight session on Monday as escalating tensions between the United States and Iran prompted investors to seek refuge in safer assets such as gold and government bonds.

The Dow Jones Industrial Average fell 169.38 points or 0.59 percent at the open of trading in New York. The S&P 500 opened down 0.53 percent while the Nasdaq was down 0.86 percent.

After ending 2019 on a strong note, Wall Street’s main indexes have been knocked off record levels after the killing of a top Iranian general by the US last week raised the threat of a new Middle East conflagration.

Tehran has threatened to avenge the killing of its military commander, Qassem Soleimani, while President Donald Trump has warned that the United States would strike back, “perhaps in a disproportionate manner”, if Iran retaliated.

“Tensions in the Middle East raise concerns for investors following what has been a really great period in markets,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey. “Certainly, some are using this as a reason to step back a little bit.”

Global benchmark Brent crude futures topped $70 per barrel after Trump also threatened to impose sanctions on Iraq if US troops were forced to withdraw from the country.

Meanwhile, investors are piling into gold and US treasuries which are seen as hedges against rising uncertainty.

US defence stocks were also bucking the downward trend in US equities. Shares of Lockheed Martin, the world’s largest defence contractor, opened higher on Wall Street along with peers Northrop Grumman and Raytheon.

The latest geopolitical concerns have added to fears that anaemic earnings growth and a less supportive US central bank, the Federal Reserve, could derail the longest bull run in US equity markets.

“Until we get to the next earnings season, absent any big news, investors are probably reluctant to commit a lot of new capital at these levels, but are also not interested in pulling back, which leaves markets a bit range-bound,” said Meckler.

Apple Inc shares were under pressure at the open after brokerage Needham cut its rating to “buy” from “strong buy”, saying the stock outperformed significantly in 2019.

Shares of Boeing Co also opened lower after a Wall Street Journal report said the planemaker was considering plans to raise more debt to bolster its finances after the grounding of its 737 MAX jet.

New York-listed shares of Nio Inc were trading higher after the Chinese electric carmaker reported higher deliveries in December, compared with the previous month.