U.S. Stocks Retreat Amid Employment Data and Middle East Tensions

U.S. stocks retreated Thursday as investors analyzed ongoing employment data and the volatile situation in the Middle East.

By 09:35 ET (13:35 GMT), the Dow Jones Industrial Average contract was down 95 points, or 0.2%. The S&P 500 index traded 15 points, or 0.3%, lower, and the NASDAQ Composite dropped 80 points, or 0.5%.

Middle East Hits Risk Assets

Risk sentiment has been significantly impacted this week by the escalating conflict in the Middle East, particularly Israel’s consideration of its response to an aerial bombardment from Iran earlier in the week.

Analysts at ING noted, “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 US.”

Jobless Claims Set Stage for Payrolls

Traders remain cautious ahead of Friday’s crucial nonfarm payrolls report, which is likely to influence market direction before the Federal Reserve’s next rate-setting meeting.

The number of Americans filing first-time claims for state unemployment benefits rose more than expected last week, although it remained close to a four-month low touched the previous week.

Seasonally adjusted initial jobless claims climbed to 225,000 in the week ended on September 28, up from an upwardly revised 219,000 the week prior, as per the Labor Department. Economists had forecasted 222,000. The earlier reading for the week ended on September 21 was 218,000, the lowest since mid-May.

Further economic data is expected later Thursday in the form of September’s services activity numbers.

Levi Strauss Slumps

In corporate news, Levi Strauss (NYSE:LEVI) stock fell 9% after the jeans maker announced a review of its Dockers brand for a potential sale and reduced its full-year revenue forecast.

Tesla (NASDAQ:TSLA) stock dropped 0.4%, extending losses from the previous session due to disappointing third-quarter deliveries and a recall of 27,185 Cybertruck vehicles due to visibility issues.

Crude Retains Strength

Oil prices increased Thursday as the escalating violence in the Middle East raised concerns over potential disruptions to crude flows from the region.

By 09:35 ET, the Brent contract rose 2.3% to $75.55 per barrel, while U.S. crude futures (WTI) traded 2.6% higher at $71.94 per barrel.

Traders are awaiting Israel’s response to Iran firing over 180 missiles into its territory on Wednesday, with worries it might target Iranian oil infrastructure.

Additionally, U.S. crude inventories grew by 3.9 million barrels to 417 million barrels in the week ending September 27, as reported by the Energy Information Administration, compared to expectations of a 1.3 million-barrel draw.