More Sparks Fly in Middle East

Wall Street on edge after Biden’s comments. A risk-off day ensued as markets digested the possibility of conflict escalation in the Middle East. The comments overshadowed a slate of economic data released today. Equities fluctuated throughout the day, but ultimately ended lower with the S&P 500 down ~0.17%, while the NASDAQ declined ~0.4%. UST yields climbed ~5-7bps across the curve, with the 2-year UST yield ending at ~3.71%, and the 10-year ending at ~3.85%.

US weighs supporting direct strikes on Iran. In response to recent missile strikes on Israel by Iran, President Biden indicated that his administration is considering supporting direct attacks on Iranian oil facilities. When asked by reporters, Biden said, “We’re discussing that…I think that would be a little – anyways.” Oil prices surged following his remarks, with Brent crude futures climbing from ~$75.0 to ~$77.8 per barrel at 4:00 PM ET.

Service sector growth accelerates. The ISM services index climbed from 51.5 in August to 54.9 in September, above surveyed estimates of a 51.7 print, and remaining solidly in expansion territory. The results marked the fastest pace of services growth since February 2023, when the index reached 55. BMO capital markets senior economist Sal Guatieri said, “Amid robust consumer spending, the large services sector continues to add backbone to the expansion, likely weighing toward a smaller quarter-point rate cut from the Fed in November…”