Market Overview

Investing.com — The S&P 500 fell Thursday, as investors weighed up data pointing to a softer labor market and ongoing geopolitical tensions in the Middle East just a day ahead of a crucial monthly jobs report.

By 4:00 p.m. ET (2000 GMT), the Dow Jones Industrial Average contract was down 184 points, or 0.4%, the S&P 500 index fell 0.2%, and the NASDAQ Composite fell 0.1%.

Middle East Hits Risk Assets

Risk sentiment has been hit hard this week by the escalation of the conflict in the Middle East. U.S. President Joe Biden said Thursday he doesn’t expect Israel to deliver its retaliatory strikes against Iran today following the latter’s attack on Tel Aviv earlier this week.

Biden also indicated the U.S. was in talks with Israel regarding potential strike targets in Iran, with the Islamic republic’s oil facilities likely to be targeted. The U.S. believes any Israeli response would likely be measured enough to avoid a new round of escalation, the Financial Times reported Thursday, citing an unnamed U.S. official.

Oil prices continued to ride Middle East tensions higher, spurring energy stocks to end in the green.

“Escalation in the Middle East has led markets to price in a greater risk of a fully-fledged conflict in the region, which could potentially involve the U.S.,” analysts at ING noted.

Jobless Claims Set Stage for Payrolls

Traders also remain wary ahead of Friday’s key nonfarm payrolls report, which is likely to set the market’s direction ahead of the Federal Reserve’s next rate-setting meeting.

The number of Americans filing first-time claims for state unemployment benefits rose by more than anticipated last week but did not stray far from a four-month low struck the previous week.

Seasonally-adjusted initial jobless claims climbed to 225,000 in the week ending September 28, increasing from an upwardly-revised mark of 219,000 the week prior. Economists had anticipated 222,000.

The earlier reading for the week ended September 21 was 218,000 — the lowest since mid-May.

Elsewhere on the economic front, services activity fell slightly more than expected in September.

Corporate Sector Update

In the corporate sector, Levi Strauss (NYSE:LEVI) stock fell more than 7% after the jeans maker announced it has put its Dockers brand under review for a possible sale and lowered its group-wide full-year revenue forecast.

Tesla (NASDAQ:TSLA) stock also dropped 3%, adding to the previous session’s losses on disappointing third-quarter deliveries, following a recall of 27,185 Cybertruck vehicles due to a visibility issue from its rearview image.

NVIDIA Corporation (NASDAQ:NVDA), on the other hand, rose more than 3% as CEO Jensen Huang stated that demand was “insane” for its next-gen Blackwell AI chips.

(Peter Nurse contributed to this story)