The S&P 500 ended near flat on Friday, weighed down by chip stocks, as investors assessed the latest developments regarding the Middle East conflict.
The broad market index added just 0.05% and closed at 7,411.98 while the Nasdaq Composite dropped 0.64% to end at 24,975.82.The Dow Jones Industrial Average gained 235.60 points, or 0.46%, to settle at 51,947.25. A 3.5% jump in Apple boosted the blue-chip index.
Stocks had moved higher earlier in the session, while oil prices pulled back, after Reuters, citing three Pakistani sources, reported that Pakistan is considering a path toward establishing new peace negotiations between the U.S. and Iran, with the push being initiated by China. However, obstacles to discussions with the U.S. are still high, the sources said.
Earlier this week, U.S. President Donald Trump said he will soon make a decision on whether to launch a "massive attack" on Iran after the conflict in the Middle East extended to a new battleground in the Red Sea. Speaking to Axios, the president said the proposed strikes would be bigger than anything seen in the war so far, and that Iran has not "received enough pain yet."
"I am considering a massive attack. Bigger than ever before. I am close to making a decision. We are all set for it," Trump said in the interview.
The New York Times on Friday reported that Trump was meeting with top advisors and his cabinet's senior members to make a decision on whether to escalate the U.S.' attacks on Iran.
Oil came off their lows after the report. Brent crude futures — which topped $100 per barrel for the first time since late May this week — eased from those levels to settle at $96.78, dropping nearly 4%. U.S. West Texas Intermediate futures fell 3% to settle at $89.31 a barrel.
Traders seemed hesitant to stay long going into a weekend that could bring more aggressive attacks on Iran.
U.S. forces have pummeled Iranian targets over the past two weeks, with Central Command completing a 13th consecutive night of strikes overnight.
"What is going on in the Middle East has the potential to create real economic outcomes with respect to restriction of hydrocarbon flows and the absorption capabilities of the global economy to deal with that," said Bill Northey, investment director at U.S. Bank Asset Management Group.
Though Northey director believes rates will remain unchanged next week in light of this week's spike in oil, the investment director added, "Fed Chair Kevin Warsh has been very clear about returning the U.S. economy's inflationary level to their target and use that as a choice, and we take him at his word."
Intel shares fell nearly 8%, reversing course from earlier gains after the chipmaker's second-quarter results exceeded Wall Street's expectations. Other chipmakers slid alongside it, with Broadcom off 2.7% and Advanced Micro Devices down 3.3%. Micron Technology declined 7%, and the VanEck Semiconductor ETF (SMH) pulled back 3%.
"I think you're just seeing a lot of outsized flows move in and out of that space on a day-to-day basis, but as we step back and look at where the powerful earnings growth is, where it exists in today's environment and what's driving '26 and '27 estimates, these are the primary beneficiaries," Northey said.
"We just have to understand that there's going to be some sentiment flows that occur in and around the space," he continued.
The S&P 500 and the Nasdaq booked back-to-back weekly losses, falling 0.6% and 2.1%, respectively. The Dow declined 0.4% in the period, marking its third straight losing week.
