Weekly Market Commentary
Oil Prices Jump After the Attack on Israel
Posted on October 9, 2023
Market Commentary by Mitchell Wood, Larson COO
|The 4th quarter opened with mixed results. The Nasdaq and the S&P 500 both managed to close positive, while the other three fell for the week.|
The mixed results were also seen at the sector level as Communication Services, Health Care, and Information Technology closed with gains while the other eight sectors dropped. Energy saw the biggest declines as the sector fell 5.39 percent. The drop was driven by the falling price per barrel of WTI Crude Futures. Crude Futures closed the week at $82.79 per barrel. This represents a roughly 8.5 percent drop from September’s high.
|YTD as of 10/06/2023|
|Dow Jones Industrial|
|Bar US Agg Bnd|
|Agent/Broker Dealer Use Only|
That said, over the weekend the attack on Israel flared up long-standing tensions in the region and sent prices up higher. While some market analysts said that prices could rise to as high as $150 per barrel, the initial shocks only sent prices back to the $90 range.
Meanwhile, interest rates continued to flatten with the longer end of the yield curve rising significantly. The 30-year yield rose 22 basis points to end the week at 4.95 percent.
This marks the highest level that this duration has been at in 26 years.
|The jump in interest rates was largely seen as the market repricing the favorable economic results that came in the form of Friday’s BLS Employment Report. The September headline reading saw the addition of 336,000 new jobs, effectively doubling the anticipated results of 170,000. This along with revisions to recent monthly results served as push back against the notion that the Fed would need to adjust the Fed Funds rate in the not too distant future due to declining economic results.|
This jump in rates hit the bond market and caused widespread losses. The Bloomberg Barclays Aggregate Bond Index fell over a percent last week and the index sits with a year-to-date loss over two and a quarter percent.
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