Stock Losses Deepen on Iran Tension; Dollar Climbs: Markets Wrap

(Bloomberg) -- U.S. stocks extended weekly losses amid mounting tension in the Persian Gulf and as investors speculated the Federal Reserve will limit a rate cut to a quarter-point. Treasury yields spiked and the dollar rose.

The S&P 500 Index erased gains after reports that Iran’s Revolutionary Guard Corps seized a British oil tanker in the Strait of Hormuz amid soaring tensions in one of the world’s critical energy chokepoints. President Donald Trump said he’ll be “working with the U.K.”

“Clearly the market s certainty and any conflict in the Middle East -- especially one which could restrict the flow of oil and goods throughout the world -- would be a negative for the global economy and stocks,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “That’s why the market sold off on the news.”

Traders on Friday rushed away from bets that the Fed will slash rates by a half-point this month, a day after clamoring for them. James Bullard, one of the most dovish members of the U.S. central bank, favors a cut by a quarter point in July. The Fed “must stop with the crazy quantitative tightening,” Trump said on Twitter. Trade tensions also remained in focus, with Trump saying the U.S. has had conversations with Chinese representatives.

In company news, American Express Co. slid as spending on cardholder rewards soared, while Boeing Co. rallied after a $4.9 billion charge on the grounding of the 737 Max jets met some expectations.

These are the main moves in markets:

Stocks

• The S&P 500 fell 0.6% to 2,976.61 as of 4 p.m. New York time.
• The Dow Jones Industrial Average lost 0.3% and the Nasdaq-100 Index slid 0.9%.
• The Stoxx Europe 600 Index rose 0.1%.
• The MSCI Asia Pacific Index surged 1.2%.

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%.
• The euro decreased 0.5% to $1.1219.
• The Japanese yen slid 0.4% to 107.72 per dollar.

Bonds

• The yield on 10-year Treasuries rose two basis points to 2.05%.
• Germany’s 10-year yield fell one basis point to -0.32%.
• Britain’s 10-year yield dipped three basis points to 0.734%.

Commodities

• The Bloomberg Commodity Index rose 0.6%.
• West Texas Intermediate crude climbed to $55.63 a barrel.

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