Israel-Iran attacks and the 2 other things that drove the stock market this week

Geopolitical tensions took center stage in the financial markets this week, as Israel’s overnight strike on Iran sent shockwaves through global markets. The attack on Iranian nuclear infrastructure caused U.S. stocks to sell off on Friday, with the S&P 500 and Nasdaq Composite tumbling 1.13% and 1.3%, respectively. Meanwhile, Brent crude futures and West Texas Intermediate crude futures saw significant gains of around 7% and 7.5%, respectively. Gold also surged to a two-month high as investors sought safe-haven assets amidst the volatility.

Prior to the attack, stock benchmarks were poised to close the week in the positive, but the sudden escalation in geopolitical tensions reversed the trend. The S&P 500 and Nasdaq ended the week down 0.4% and 0.6% respectively, snapping back-to-back weekly winning streaks. The U.S. dollar index also faced pressure throughout the week, reflecting the uncertainty in the markets.

In addition to geopolitical events, investors also monitored economic data releases closely. Inflation data released on Wednesday and Thursday showed that core prices rose less than expected, providing some relief on the inflation front. The labor market remained relatively stable, with weekly jobless claims unchanged and continuing claims at multiyear highs. Overall, the economic data painted a positive picture, with inflation subsiding and unemployment remaining low.

On the technology front, companies made significant strides in the artificial intelligence (AI) space. Apple’s annual worldwide developer conference disappointed some investors due to the lack of AI updates, while Meta Platforms announced a major investment in Scale AI to establish a new “superintelligence” unit. Nvidia CEO Jensen Huang emphasized the increasing demand for accelerated compute capacity, particularly in Europe. Oracle and Advanced Micro Devices also made headlines in the AI space, with Oracle reporting strong quarterly results and AMD unveiling a new AI server chip to rival Nvidia’s offerings.

The integration of AI into various industries continues to drive market dynamics, with companies striving to innovate and stay ahead in the rapidly evolving technology landscape. As geopolitical tensions persist and economic indicators fluctuate, investors will need to navigate these uncertainties while keeping a close eye on technological advancements and their implications for the market.