New York Stock Market Shows Caution Amid US-Iran Tensions... Dow Jones Index Falls 0.4%

by Na Juseok

Published 08 Jan.2020 08:05(KST)

Updated 08 Jan.2020 08:10(KST)

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[Asia Economy Reporter Naju-seok] The New York stock market declined due to tensions and conflicts between the United States and Iran.

On the 7th (local time), the Dow Jones Industrial Average fell 119.70 points (0.42%) to 28,583.68. The S&P 500 index dropped 9.10 points (0.28%) to 3,237.18, and the Nasdaq Composite index decreased by 2.88 points (0.03%) to 9,068.58.

Although there were positive factors such as the U.S. Institute for Supply Management (ISM) Services Purchasing Managers' Index (PMI) exceeding market expectations, concerns over the conflict between the U.S. and Iran had a significant impact. Experts viewed that market participants were maintaining a wait-and-see stance.

Iran repeatedly expressed its intention to retaliate in connection with the killing of Qasem Soleimani, commander of the Quds Force, by U.S. forces. Ali Shamkhani, Secretary of Iran's Supreme National Security Council, stated, "We are considering 13 scenarios for retaliation against the United States."

The U.S. also stated that it would respond if Iran retaliates. U.S. Secretary of Defense Mark Esper said, "We are prepared for any emergency." The U.S. has increased its troop deployment in Iraq.

Initially, Iran planned to hold a burial ceremony for Soleimani's body, but the ceremony was postponed due to a crowd crush accident during the funeral held in Soleimani's hometown. The date of the burial ceremony has not yet been announced.

The U.S. ISM reported that the services PMI for last month was 55. This exceeded the previous month's 53.9 as well as the market expectation of 54.5. The PMI is an economic indicator based on surveys of purchasing managers in companies regarding new orders, production, inventory, and so on. A PMI above 50 indicates economic expansion, while below 50 indicates contraction.

After the conflict between the U.S. and Iran, crude oil prices, which had been rising, turned downward. On the New York Mercantile Exchange (NYMEX), February delivery West Texas Intermediate (WTI) crude oil closed at $62.7, down 0.9% from the previous day. February Brent crude oil traded on the London ICE Futures Exchange fell 0.94% to $68.26.