Stocks Finish Lower, Oil Prices Higher After U.S. Kills Iranian Military Leader

Stocks finished lower Friday after a U.S. military strike killed Gen. Qassem Soleimani, the head of Iran’s elite Quds Force.
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  1. Stocks ended lower Friday after a U.S. military strike killed Gen. Qassem Soleimani, the head of Iran’s elite Quds Force, at the Baghdad airport.
  2. Global oil prices rose on news that U.S. forces killed the Iranian general in Iraq.
  3. Tesla delivered 112,000 vehicles to customers in the fourth quarter, beating analysts' estimates.

Stocks ended lower Friday and oil prices gained after a U.S. military strike killed Gen. Qassem Soleimani, the head of Iran’s elite Quds Force, at the Baghdad airport.

"At the direction of the president, the U.S. military has taken decisive defensive action to protect U.S. personnel abroad by killing Qassem Soleimani," the Pentagon said in a statement, adding the general was "actively developing plans to attack American diplomats and service members in Iraq and throughout the region."

The Dow Jones Industrial Average finished down 234 points, or 0.81%, to 28,635, the S&P 500 dropped 0.71% and the Nasdaq was off 0.79%.

The Dow had been down about 368 points shortly after markets opened Friday.

JPMorgan Chase (JPM) - Get Report, Caterpillar (CAT) - Get Report, and Cisco (CSCO) - Get Report were leading the Dow's retreat.

News that Soleimani was killed could draw Iranian retaliation against Israeli and American interests, according to experts.

“A big fat dollop of geopolitical uncertainty has landed on investors' desks,” said Jeffrey Halley of Oanda.

The U.S. plans to send more than 3,000 troops from the Army’s 82nd Airborne division to Kuwait, boosting its presence in the Middle East, according to multiple reports Friday.

"As a citizen, I am paying attention," said Brad McMillan, chief investment officer for Commonwealth Financial Network. "As an investor, I am asking what this potential chaos will do to the markets. The answer is not what the headlines suggest. While some short-term volatility is almost certain, the actual effects, over time, will likely not be nearly be as bad as might be feared."

The Federal Reserve said Friday, in minutes from the Federal Open Market Committee's Dec. 10-11 meeting, that interest rates are likely remain on hold as long as the economy remains on solid footing. The Fed also said that risks to its economic outlook appeared to have eased in recent months.

The Fed said it feels that “the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s 2 percent objective.”

At the meeting last month, the central bank voted to hold its benchmark interest rate steady in a range between 1.5% and 1.75%. The Fed had cut rates by a quarter percentage point at each of its previous three meetings in 2019.

Apart from the Middle East tensions, stocks also were pressured by U.S. manufacturing data for December, which came in lower than expected. The ISM manufacturing survey fell to 47.2 in December from 48.1. December's reading was the lowest since June 2009.

Global oil prices rose on news that U.S. forces had killed the Iranian general in Iraq, and as Iran's supreme leader, Ayatollah Ali Khamenei, vowed to seek revenge on American targets with the help of allies around the Muslim world.

The ayatollah warned Friday that a “harsh retaliation is waiting” for the United States.

Brent crude futures contracts for February delivery, the global benchmark, were rising 2.39% on Friday to $68.64 a barrel, while West Texas Intermediate crude contracts for the same month jumped 3% to $63.01.

The Energy Information Administration reported Friday that U.S. crude supplies fell by 11.46 million barrels for the week ended Dec. 27, well more than analysts had forecast.

U.S. airline stocks fell Friday amid the surge in global crude prices -- the biggest cost input for most domestic and international carriers -- and the U.S. State Department issued a security warning for American citizens in Iraq.

Shares of American Airlines (AAL) - Get Report, Delta Air Lines (DAL) - Get Report and Southwest Airlines (LUV) - Get Report declined Friday.

Tesla (TSLA) - Get Report delivered 112,000 vehicles to customers in the fourth quarter, beating analysts' estimates of 106,000 vehicles.

The fourth-quarter total meant Tesla delivered 367,500 vehicles for the year, allowing the electric vehicle company to beat the low end of guidance for total deliveries in 2019, which it had earlier put at between 360,000 and 400,000.