Stocks slide, oil prices spike after U.S. kills Iranian general
The major stock averages are weaker following news that a U.S. airstrike killed a key Iranian general, after which Iran promised "harsh retaliation." Some sectors - such as energy and defense - are rising amid the higher tension in the Middle East but transportation stocks - particularly air carriers - are falling given the rising costs they may face if the bump up in oil prices holds.
ECONOMIC EVENTS: In the U.S., construction spending surged 0.6% in November. The ISM manufacturing index fell to 47.2 in December from 48.1 in November.
TOP NEWS: Shares of Tesla (TSLA) opened at a new record high after the electric carmaker reported fourth quarter deliveries that beat expectations. With the help of its "record" deliveries of approximately 112,000 vehicles, Tesla delivered approximately 367,500 vehicles for the year, topping the low end of the company's guidance range. Meanwhile, its traditional automaking peers are falling as they report on their own vehicle deliveries in the fourth quarter. General Motors (GM), which announced that it delivered 735,909 vehicles in the U.S. in the fourth quarter, down 6.3% year-over-year, is trading lower, as is Fiat Chrysler (FCAU) after reporting its U.S. sales for the fourth quarter were down 2% to 542,519 vehicles.
A number of oil and gas explorers' stocks are outperforming this morning as oil prices spike following news that the U.S. ordered a drone strike killing Iran's Qasem Soleimani, the head of the Islamic Revolutionary Guard Corps-Quds Force. W&T Offshore (WTI), Whiting Petroleum (WLL), Oasis Petroleum (OAS), Diamond Offshore (DO), Hess Corp. (HES), Cimarex Energy (XEC) and Apache (APA) are just a few of the many energy names rising this morning following the Iran attack news.
Defense contractors - including Northrop Grumman (NOC), Lookheed Martin (LMT), L3Harris (LHX) and Raytheon (RTN) - are also trading higher based on the rising tension in the Middle East.
Airlines including American (AAL), Delta (DAL) and United (UAL) are being dragged down by the spike in oil prices as well as the potential for higher risks in Mid East region to dampen travel demand.
MAJOR MOVERS: Among the noteworthy gainers was L Brands (LB), which rose 8% after BofA analyst Lorraine Hutchinson upgraded shares to Buy from Neutral with a price target of $25, up from $21.
Also higher was Lamb Weston (LW), which gained 11% after reporting quarterly results.
Among the notable losers was Novan (NOVN), which dropped 73% after the release of its Phase 3 SB206 data indicating that statistical significance was not achieved for the primary endpoint in either of its B-SIMPLE1 or B-SIMPLE2 trials.
Also lower was Incyte (INCY), which fell 10% after announcing that that the pivotal Phase 3 GRAVITAS-301 study evaluating itacitinib in combination with corticosteroids in patients with treatment-naive acute graft-versus-host disease did not meet its primary endpoint.
INDEXES: Near midday, the Dow was down 170.26, or 0.59%, to 28,698.54, the Nasdaq was down 42.73, or 0.47%, to 9,049.46, and the S&P 500 was down 13.99, or 0.43%, to 3,243.86.