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MIDDLE EAST JITTERS DERAIL DRIVE TO NEW HIGHS

Wall Street's main indexes fell on Friday after Israel struck a series of nuclear facilities and missile factories in Iran aimed at preventing Tehran from building an atomic weapon.

After paring losses into the early afternoon, renewed downside pressure emerged after Iranian media said the country launched missiles toward Israel, marking a response to the intensive Israeli strikes aimed at crippling Iran's ability to build nuclear weapons.

NYMEX crude futures CLc1 are surging more than 8% on the day on fears the conflict could disrupt crude supply from the Middle East. That said, crude futures have given back nearly half of their earlier gain.

Still CLc1, at around $73.50, is on track for its biggest weekly gain since October 2022.

The S&P 500 energy sector .SPNY rose more than 1.5% on Friday, and was the only group to end in positive territory. Energy scored its biggest weekly gain since January.

With oil prices, and yields jumping, the main U.S. equity indexes each fell more than 1%. The S&P 500 index .SPX closed off 1.1% at 5,976.97. The benchmark index, which ended down just 1.6% from its February 19 record close on Thursday, finished down 2.7% from that level on the day.

Not surprisingly, defense names jumped on the day. Both Lockheed Martin LMT.N and RTX corp RTX.N rallied more than 3%.

Regarding the day's events, Jay Hatfield, chief executive officer at Infrastructure Capital Advisors in New York, said:

"We thought the initial reaction in oil was way overdone. The fundamental of supply and demand argues for about a $70 price and that's our target for the year.... we do think we'll probably trade back toward $70 because the history has been that these conflicts do avoid the oil installations."

With the stock market, the news was an excuse for a pullback, he said.

"We're not doing much in our ETFs; we're still bullish on the year, so we're kind of holding," he said.

"We don't think this is a tradeable decline," he said. "If we thought things were terrible, we would buy puts."

Here is a snapshot of where markets stood just shortly after 4 p.m. EDT:

(Terence Gabriel, Caroline Valetkevitch)

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