Stock futures are little changed Monday evening as Israel-Hamas war raises geopolitical concerns: Live updates

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U.S. stock futures were near the flat line on Monday night as Wall Street assessed the impact and risks of a protracted conflict from the Israel-Hamas war.

Dow Jones Industrial Average futures traded near the flatline. Futures linked to the S&P 500 ticked down 0.01%, while Nasdaq 100 futures added 0.07%.

During Monday’s trading session, stocks were initially lower – with the Nasdaq falling more than 1% during its session lows — before turning positive across the board. The 30-stock Dow added 197 points, or 0.6%, while the Nasdaq Composite gained 0.4%. The S&P 500 added 0.6%.

Amid the conflict, West Texas Intermediate crude and Brent popped more than 4% for their best days since April. Energy and defense stocks also surged.

Hamas’ attack against Israel marks the deadliest offensive in 50 years. At least 900 people in Israel have been killed thus far in what Hamas is calling Operation Al Aqsa Flood, with more than 687 people in Gaza and the West Bank dead in retaliatory Israeli strikes across the Gaza Strip, according to the latest figures.

Hamas is a designated terrorist group backed by Iran that has governed the Gaza Strip since 2007.

“Of course, it’s going to send some jitters to markets. But what we have seen over time is that typically, the impact in the longer run from geopolitical events tends to be somewhat contained,” Meera Pandit, global market strategist at JPMorgan Asset Management, said on CNBC’s “Closing Bell” on Monday.

In the wake of the attacks, investors have also raised concerns of how tougher sanctions on Iran could affect global oil supply.

Tightened sanctions on Iran and subsequent disruptions to Iran’s oil supply “would have more of an impact on oil markets,” said BMO Capital Markets chief investment officer Yung-Yu Ma.

“I think the oil markets have a little bit of a buffer here. Even just a couple of weeks ago, we were still about 5% higher than [now]. … But there’s a risk out there of the developments, in a situation like this, [that] are very difficult to predict,” Ma said.

Investors will be keeping an eye on upcoming economic data. The NFIB Small Business Survey data from September will be released Tuesday, as well as August’s wholesale inventories numbers. Wall Street will also be closely watching PepsiCo’s quarterly earnings results Tuesday before the bell.

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Aerospace and defense ETF sees best day since November 2020

The iShares U.S. Aerospace & Defense ETF (ITA) notched its biggest gain since Nov., 9 2020 as the war between Israel and Hamas lifted defense stocks.

The ETF added 4.45% on Monday, driven by Northrop Grumman and Kratos Defense. Both of those stocks added more than 11%. It was Northrop’s best day since March 2020.

L3Harris Technologies and Huntington Ingalls both advanced more than 9%, as well.

Kratos’ gains also contributed to the Russell 2000‘s 0.6% rise on Monday. The small-cap benchmark climbed for the fourth consecutive session, propelled by National Western Life, up nearly 17%, and WW International, up 13%.

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Israel-Hamas war not likely to trigger a new bear market, says strategist

Military shocks on their own have tended to be short-lived in the market, according to Sam Stovall, chief investment strategist at CFRA Research.

“Typically, the stock market initially reacted negatively to the uncertainty by declining in the first day and month after the event, but then recovered and advanced 60 and 90 days later,” Stovall said.

How oil prices move in the coming days could decide if the Israel-Hamas war becomes a more protracted headwind for the market, according to the strategist.

“Even though oil prices spiked by 4.3% on the first trading day after the attack, the U.S. dollar weakened and share prices rose, implying that traders think this military shock will also likely not trigger a new bear market,” Stovall added.

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Bonds are attractive right now, strategist says

It’s time to buy bonds as U.S. Treasury yields hit multiyear highs, according to Emily Roland, co-chief investment strategist at John Hancock Investment Management.

“I’ve been doing this job for about a decade now. This is actually the first time that we’ve been overweight bonds in portfolios. It takes a lot for us to love bonds,” Roland said Monday on CNBC’s “Closing Bell.”

The 10-year U.S. Treasury yield last week reached its highest level since 2007. However, Roland expects investors should secure higher yields as the Federal Reserve nears the end of its rate hiking campaign.

“We all know that equities are a much more powerful compounder of wealth over time. So, we’ll probably go back to an overweight to stocks once we see this downshift in bond yields play out, which we certainly expect as economic contraction unfolds,” Roland said.

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