Wall Street’s war fears

In today’s big story, we’re looking at the impact the Hamas-Israel conflict will have on the broader global economy.

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The initial attack, which some described as “Israel’s 9/11,” and Israel’s response have already led to hundreds of deaths among Israelis and Palestinians. For more on why Hamas attacked Israel after decades of conflict, it’s worth reading Tom Porter’s insightful analysis.

Beyond the loss of human life, which is always the most significant toll paid during these events, there are countless knock-on effects.

Here’s a breakdown of what the Hamas-Israel war could mean for everything from the oil market to social media:

• Oil: When a conflict in the Middle East arises, the oil industry is often quick to react. On Monday, prices jumped as much as 5% over fears of supply disruptions. In the long term, legendary commodities trader Pierre Andurand said the conflict will force the market to “beg” Saudi Arabia for more supply. It’s just the latest in what has been a volatile time for oil prices, clouding the inflation outlook.
• Markets: Israel’s currency tumbled to a 7-year low, and its central bank has sold off $30 billion in foreign reserves to prop it up. Russia’s ruble also hit an 18-month low against the US dollar. On the other hand, defense sector stocks like Northrop Grumman, General Dynamics, and Lockheed Martin all rose. From the price of gold to Wall Street’s fear gauge (the VIX), DataTrek Research highlighted five key indicators to watch regarding other potential impacts. Meanwhile, high-profile investors like Pershing Square’s Bill Ackman and Social Capital’s Chamath Palihapitiya have weighed in on the war and its risks.
• Social media: The attacks have put social media’s flaws back under the microscope. Elon Musk recommended his followers get updates on the war from two accounts that have previously peddled misinformation. Insider’s Hasan Chowdhury gave an overview of the deluge of misleading information regarding the war on social media.
• Foreign policy: The US has already said it will send F-35 and F-15 jets to the Middle East to prevent the war in Israel from escalating. Ret. Gen. Barry McCaffrey suggested the US would “go to war” in Israel if Syria or Iran became actively involved. Meanwhile, a Washington-based think tank said Russia will use the conflict to generate propaganda to undermine the West’s support for Ukraine.

🔔 Before the opening bell: US stock futures rise early Tuesday as investors assess the impact of the Israel-Hamas conflict.

2. US stocks are too pricey for billionaire Ray Dalio. The founder of Bridgewater Associates highlighted mounting debt, political infighting, and geopolitical risks as reasons investors should be cautious. “Over the next year, we will have a great political conflict,” he predicted.

3. This bull market isn’t turning heads. The stock market rally since October 2022 has been one of the weakest bull markets on record. Elevated valuations and monetary tightening policies have kept things from taking off.

2. Meta is reportedly paying celebrities as much as $5 million for six hours of work. The tech giant hired a variety of celebs for its AI chatbots, including MrBeast, Kendall Jenner, Naomi Osaka, Charli D’Amelio, and Tom Brady. And Meta reportedly shelled out big bucks for the big names.

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2. CEO Bob Iger is under more pressure to break up Disney. Activist investor Nelson Peltz has reportedly upped his stake in the company. This could mean Disney is on track to sell assets like ESPN and ABC.

3. The surge in energy-hungry data centers is delaying green energy pushes. In Phoenix, data centers have attracted attention for the noise they blare, the water they guzzle, and the swaths of land they’ve consumed. Now, it’s impeding green efforts to end the use of fossil fuels.

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Dan DeFrancesco, senior editor and anchor, in New York City. Diamond Naga Siu, senior reporter, in San Diego. Hallam Bullock, editor, in London. Lisa Ryan, executive editor, in New York.

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