US stocks were mixed in late trading on Friday, with the S&P 500 index turning negative as chip stocks weighed on the market, while investors assessed the latest developments in the Middle East conflict.
The Dow Jones Industrial Average rose 165.63 points, or 0.32%, to 51,877.28 points. The Nasdaq Composite fell 157.55 points, or 0.63%, to 24,980.14 points. The S&P 500 index declined 2.68 points, or 0.04%, to 7,405.62 points.
Earlier in Friday's session, stocks had risen as oil prices fell, following a report citing three Pakistani sources that the country is considering paving the way for new peace talks between the US and Iran. However, the sources indicated that obstacles to dialogue with Washington remain significant.
Earlier this week, US President Donald Trump stated that he would soon decide whether to launch a "large-scale attack" on Iran, after the Middle East conflict spread to a new front in the Red Sea. In an interview with Axios, the president said the proposed strikes would be larger than any military action seen so far, adding that Iran has "not suffered enough yet."
"I am considering launching a large-scale attack. Bigger than anything before. I am about to make a decision. We are fully prepared for this," Trump said in the interview.
Reports on Friday indicated that Trump is meeting with senior advisors and core cabinet members to decide whether to escalate US strikes against Iran.
Following this report, oil prices recovered from their lows. Brent crude futures, which briefly surpassed $100 per barrel earlier this week—the first time since late May—pulled back from that level and are currently trading around $96, down 4%. US West Texas Intermediate crude futures fell 3%, trading above $89 per barrel.
Traders may be reluctant to hold positions over the weekend, as more aggressive attacks on Iran could occur during that period.
Over the past two weeks, US forces have been continuously striking Iranian targets, with the Central Command completing its 13th consecutive night of airstrikes.
"The situation in the Middle East has the potential to create real economic consequences in terms of reducing the flow of hydrocarbons and the global economy's ability to absorb this issue," said Bill Nosey, Chief Investment Officer at Bank of America Asset Management Group.
Although Nosey believes that US interest rates will remain unchanged next week given the surge in oil prices this week, he added: "Federal Reserve Chair Kevin Warsh has made it very clear that bringing US inflation back to its target is a policy choice, and we believe him."
Intel shares fell 6%, reversing early gains after the chipmaker's second-quarter results beat Wall Street expectations. Other chip stocks also declined, with Broadcom and Advanced Micro Devices each falling 3%. Micron Technology dropped 8%, and the VanEck Semiconductor ETF (SMH) fell 3%.
"I think you're just seeing a lot of very large money flowing in and out of this sector every day, but when we step back and look at where strong earnings growth is, where it exists in the current environment, and what is driving expectations for 2026 and 2027, these (chip stocks) are the main beneficiaries," Nosey said.
"We just need to understand that there will be some sentiment-driven capital flows in and around this sector," he continued.
The Dow Jones Industrial Average and the S&P 500 are both expected to end the week lower, down 0.6% and 0.7%, respectively. The Nasdaq is projected to fall more than 2% this week.
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