The U.S. stock market opened lower on Monday as the escalating conflict between Israel and Hamas added geopolitical risk to the already fragile global outlook. The Dow Jones Industrial Average fell 0.45%, the S&P 500 dropped 0.60%, and the Nasdaq Composite slid 0.76% in early trading1.
The violence in the Middle East, which has claimed more than 200 lives so far, has raised fears of a wider regional war and disrupted oil supplies. Crude oil prices surged 3.59% to $85.76 a barrel, the highest level since October 20141. Gold, a traditional safe-haven asset, also rose 1.01% to $1,850.69 an ounce1.
Investors were also worried about the impact of rising inflation and supply chain disruptions on the global economic recovery. The U.S. consumer price index (CPI) for September, due on Wednesday, is expected to show a 5.3% year-on-year increase, matching the highest level since 20082. The U.S. producer price index (PPI) for September, due on Thursday, is forecast to rise 8.7% year-on-year, the highest level since 20102.
Meanwhile, China’s power crisis and property sector woes continued to weigh on market sentiment. China’s GDP growth for the third quarter, due on Monday, is expected to slow to 5.2% year-on-year, the lowest level since the pandemic hit3. China’s exports for September, due on Tuesday, are projected to grow 21.5% year-on-year, down from 25.6% in August3.
The market will also keep an eye on the earnings season, which kicks off this week with reports from major banks such as JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs. Analysts expect S&P 500 companies to report a 27.6% year-on-year increase in earnings for the third quarter, down from 94.7% in the second quarter4.