Middle East Tensions Drive Market Volatility
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Source: CNBC
- Market Reaction: The re-escalation of tensions in the Middle East has led to significant market volatility, with investors struggling to find a reliable theme, particularly after President Trump's announcement of a 'largely negotiated' deal with Iran, which caused crude oil prices to plummet and stocks to rally, highlighting the market's sensitivity to headlines.
- Oil and Volatility Correlation: WTI crude oil was trading around $50 at the beginning of the year, while the volatility index (VIX) hovered in the mid-teens; however, as the Iranian conflict intensified, both crude oil and volatility began to rise, indicating a clear correlation between the two, leaving future market expectations uncertain.
- Energy vs. Technology Performance: Contrary to popular belief that technology stocks are leading, the energy sector has risen 32% year-to-date, outpacing technology's 29%, suggesting that in a volatile market, energy remains a focal point for investors, especially as global supply chains face disruptions.
- Airline Recovery Signals: With the JETS ETF breaking above April highs, airlines like Delta and American Airlines, which were severely impacted by the conflict, are showing signs of recovery, indicating that the airline sector may perform better in the future, particularly if oil prices decline.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy DAL?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on DAL
Wall Street analysts forecast DAL stock price to rise
18 Analyst Rating
18 Buy
0 Hold
0 Sell
Strong Buy
Current: 81.800
Low
77.00
Averages
83.50
High
90.00
Current: 81.800
Low
77.00
Averages
83.50
High
90.00
About DAL
Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo throughout the United States and around the world. The Company has hubs and markets in Amsterdam, Atlanta, Bogota, Boston, Detroit, Lima, London-Heathrow, Los Angeles, Mexico City, Minneapolis-St. Paul, New York-JFK and LaGuardia, Paris-Charles de Gaulle, Salt Lake City, Santiago (Chile), Sao Paulo, Seattle, Seoul-Incheon, and Tokyo. Its segments include Airline and Refinery. Its airline segment is managed as a single business unit that provides scheduled air transportation for passengers and cargo throughout the United States and around the world and includes its loyalty program, as well as other ancillary businesses. Its refinery segment operates for the benefit of the airline segment by providing jet fuel to the airline segment from its own production and through jet fuel obtained through agreements with third parties. The refinery's production consists of jet fuel as well as non-jet fuel products.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Airlines Warn of Immigration Policy Impact
- Industry Warning: Major U.S. airline and hotel groups have condemned the Trump administration's potential halt of customs and immigration processing at 'sanctuary city' airports, warning that such a move could have 'devastating' effects on the industry, particularly with the FIFA World Cup approaching, which is expected to draw millions of visitors.
- Policy Impact: Homeland Security Secretary Mark Mullin indicated that the government is considering stopping international flight processing in cities with lenient immigration policies, raising concerns about severe impacts on international flights, especially in major hubs like New York and Los Angeles.
- Operational Disruption Risk: Airlines for America warned that reducing Customs and Border Protection staffing at major airports would significantly disrupt airline and tourism operations, affecting traveler flow and international cargo transport, potentially leading to higher costs and inconveniences for airlines and travelers.
- Tourism Sector Damage: The U.S. Travel Association stated that implementing this policy would have 'devastating consequences' for communities reliant on international visitors, likely resulting in a significant downturn for hotels and tourism-related businesses, thereby impacting overall economic vitality.
See More
Immigration Policy May Impact International Flights
- Immigration Policy Controversy: Homeland Security Secretary Markwayne Mullin stated in a Fox News interview that if 'radical left Democrats' do not allow the government to enforce federal laws, international flights should not be processed, indicating a potential shift towards stricter immigration policies.
- Strong Industry Response: Major U.S. airlines and tourism groups warned that halting customs and immigration processing at 'sanctuary city' airports would have 'devastating' consequences for the industry and travelers, particularly with the upcoming international events.
- World Cup Approaching: Mullin's comments come just before the FIFA Men's World Cup, which is expected to bring millions of visitors to the U.S., Canada, and Mexico, raising concerns that such policies could disrupt the smooth operation of the event.
- Potential Operational Disruption: Airlines for America highlighted that reducing Customs and Border Protection staffing at major airports would significantly disrupt airline operations, traveler flow, and international cargo transport, potentially leading to a downturn in the industry.
See More
U.S.-Iran Negotiation Fluctuations Impact Markets
- Oil Price Plunge: Oil prices dropped over 5% on Wednesday after Secretary of State Marco Rubio indicated that Washington was giving Iran talks 'every chance to succeed,' reflecting market sensitivity to diplomatic efforts and potentially impacting energy sector profitability.
- Escalation of Military Actions: New U.S. airstrikes in Iran targeted a military site deemed a threat to U.S. forces and commercial maritime traffic, adding uncertainty to the ongoing diplomatic negotiations and prompting investors to reassess risk levels in the market.
- Strong Tech Stock Performance: Shares of cloud-based AI and data platform company Snowflake surged 36% following a strong earnings report and a $6 billion investment plan in Amazon Web Services, showcasing investment enthusiasm and market confidence in the tech sector amid rising AI demand.
- Inflation Data Focus: Investors are closely watching the upcoming April inflation reading, which is expected to influence the Fed's future rate decisions, as Minneapolis Fed President Neel Kashkari emphasized that lowering inflation remains a top priority, indicating market sensitivity to economic policy.
See More
Mixed Close for US Stocks as Oil Prices Plunge
- Market Performance: On Wednesday, the S&P 500 Index rose by 0.02%, the Dow Jones Industrial Average increased by 0.36% to a new record high, while the Nasdaq 100 fell by 0.09%, indicating a divergence in market sentiment amid enthusiasm for artificial intelligence and declining oil prices.
- Oil Price Fluctuations: Crude oil prices plummeted over 5% to a five-week low due to optimism surrounding a US-Iran peace deal, which eased inflation expectations and pushed the 10-year Treasury yield down to a 1.5-week low of 4.45%, providing support for the bond market.
- Mortgage Application Decline: US MBA mortgage applications fell by 8.5% for the week ending May 22, with the purchase mortgage sub-index down 0.4% and the refinancing sub-index down 18.1%, reflecting the dampening effect of high interest rates on housing demand, as the average 30-year fixed mortgage rate rose to 6.65%.
- Corporate Earnings Outlook: As of Wednesday, 83% of the 475 S&P 500 companies that reported Q1 earnings exceeded expectations, with projected earnings growth of 12% year-over-year, but excluding the technology sector, the growth is only 3%, indicating signs of overall earnings weakness.
See More
Investors Should Focus on Transportation Stocks
- Joby Aviation's Potential: Joby Aviation's S4 eVTOL aircraft can fly 150 miles on a single charge and reach speeds of 200 mph, with revenue projected to soar from $53 million in 2025 to $458 million by 2028, indicating significant future market potential.
- Market Support and Partnerships: Backed by major companies like Toyota, Delta Air Lines, and Uber, Joby benefits from Toyota's engineering support, Delta's integration of flights into premium tickets, and Uber's inclusion in its Uber Air platform, enhancing its competitive edge.
- Stability of Canadian National Railway: Operating a 20,000-mile rail network, Canadian National Railway is diversified across multiple sectors, with analysts forecasting an 8% CAGR in EPS from 2025 to 2028, highlighting its potential as a reliable investment.
- Challenges and Responses: Despite facing challenges such as tariff negotiations, rising oil prices, and labor disputes, Canadian National Railway's ongoing exports of oil products, grain, and fertilizer are expected to mitigate these pressures, ensuring long-term stability.
See More
Mixed US Stock Market with Energy Stocks Under Pressure
- Divergent Market Performance: The S&P 500 index fell by 0.07% while the Dow Jones Industrial Average rose by 0.54%, indicating a divergence in market trends, particularly with the Dow reaching a new high, reflecting increased investor confidence in certain sectors.
- Impact of Falling Oil Prices: Crude oil prices dropped over 3% amid optimism for a normalization of oil flows from the Middle East, which not only eased inflation expectations but also pushed the 10-year Treasury yield down to a 1.5-week low of 4.45%, positively affecting the bond market.
- Decline in Mortgage Applications: US MBA mortgage applications fell by 8.5% for the week ending May 22, with the purchase mortgage sub-index down 0.4% and the refinancing sub-index plunging 18.1%, indicating the suppressive effect of high interest rates on the housing market.
- Corporate Earnings Overview: As of now, 83% of the 475 S&P 500 companies that reported Q1 earnings have exceeded expectations, with overall earnings projected to rise by 12% year-on-year, but excluding the tech sector, the growth is only 3%, highlighting disparities across industries.
See More
Airlines Warn of Immigration Policy Impact
- Industry Warning: Major U.S. airline and hotel groups have condemned the Trump administration's potential halt of customs and immigration processing at 'sanctuary city' airports, warning that such a move could have 'devastating' effects on the industry, particularly with the FIFA World Cup approaching, which is expected to draw millions of visitors.
- Policy Impact: Homeland Security Secretary Mark Mullin indicated that the government is considering stopping international flight processing in cities with lenient immigration policies, raising concerns about severe impacts on international flights, especially in major hubs like New York and Los Angeles.
- Operational Disruption Risk: Airlines for America warned that reducing Customs and Border Protection staffing at major airports would significantly disrupt airline and tourism operations, affecting traveler flow and international cargo transport, potentially leading to higher costs and inconveniences for airlines and travelers.
- Tourism Sector Damage: The U.S. Travel Association stated that implementing this policy would have 'devastating consequences' for communities reliant on international visitors, likely resulting in a significant downturn for hotels and tourism-related businesses, thereby impacting overall economic vitality.
See More
Immigration Policy May Impact International Flights
- Immigration Policy Controversy: Homeland Security Secretary Markwayne Mullin stated in a Fox News interview that if 'radical left Democrats' do not allow the government to enforce federal laws, international flights should not be processed, indicating a potential shift towards stricter immigration policies.
- Strong Industry Response: Major U.S. airlines and tourism groups warned that halting customs and immigration processing at 'sanctuary city' airports would have 'devastating' consequences for the industry and travelers, particularly with the upcoming international events.
- World Cup Approaching: Mullin's comments come just before the FIFA Men's World Cup, which is expected to bring millions of visitors to the U.S., Canada, and Mexico, raising concerns that such policies could disrupt the smooth operation of the event.
- Potential Operational Disruption: Airlines for America highlighted that reducing Customs and Border Protection staffing at major airports would significantly disrupt airline operations, traveler flow, and international cargo transport, potentially leading to a downturn in the industry.
See More
U.S.-Iran Negotiation Fluctuations Impact Markets
- Oil Price Plunge: Oil prices dropped over 5% on Wednesday after Secretary of State Marco Rubio indicated that Washington was giving Iran talks 'every chance to succeed,' reflecting market sensitivity to diplomatic efforts and potentially impacting energy sector profitability.
- Escalation of Military Actions: New U.S. airstrikes in Iran targeted a military site deemed a threat to U.S. forces and commercial maritime traffic, adding uncertainty to the ongoing diplomatic negotiations and prompting investors to reassess risk levels in the market.
- Strong Tech Stock Performance: Shares of cloud-based AI and data platform company Snowflake surged 36% following a strong earnings report and a $6 billion investment plan in Amazon Web Services, showcasing investment enthusiasm and market confidence in the tech sector amid rising AI demand.
- Inflation Data Focus: Investors are closely watching the upcoming April inflation reading, which is expected to influence the Fed's future rate decisions, as Minneapolis Fed President Neel Kashkari emphasized that lowering inflation remains a top priority, indicating market sensitivity to economic policy.
See More
Mixed Close for US Stocks as Oil Prices Plunge
- Market Performance: On Wednesday, the S&P 500 Index rose by 0.02%, the Dow Jones Industrial Average increased by 0.36% to a new record high, while the Nasdaq 100 fell by 0.09%, indicating a divergence in market sentiment amid enthusiasm for artificial intelligence and declining oil prices.
- Oil Price Fluctuations: Crude oil prices plummeted over 5% to a five-week low due to optimism surrounding a US-Iran peace deal, which eased inflation expectations and pushed the 10-year Treasury yield down to a 1.5-week low of 4.45%, providing support for the bond market.
- Mortgage Application Decline: US MBA mortgage applications fell by 8.5% for the week ending May 22, with the purchase mortgage sub-index down 0.4% and the refinancing sub-index down 18.1%, reflecting the dampening effect of high interest rates on housing demand, as the average 30-year fixed mortgage rate rose to 6.65%.
- Corporate Earnings Outlook: As of Wednesday, 83% of the 475 S&P 500 companies that reported Q1 earnings exceeded expectations, with projected earnings growth of 12% year-over-year, but excluding the technology sector, the growth is only 3%, indicating signs of overall earnings weakness.
See More
Investors Should Focus on Transportation Stocks
- Joby Aviation's Potential: Joby Aviation's S4 eVTOL aircraft can fly 150 miles on a single charge and reach speeds of 200 mph, with revenue projected to soar from $53 million in 2025 to $458 million by 2028, indicating significant future market potential.
- Market Support and Partnerships: Backed by major companies like Toyota, Delta Air Lines, and Uber, Joby benefits from Toyota's engineering support, Delta's integration of flights into premium tickets, and Uber's inclusion in its Uber Air platform, enhancing its competitive edge.
- Stability of Canadian National Railway: Operating a 20,000-mile rail network, Canadian National Railway is diversified across multiple sectors, with analysts forecasting an 8% CAGR in EPS from 2025 to 2028, highlighting its potential as a reliable investment.
- Challenges and Responses: Despite facing challenges such as tariff negotiations, rising oil prices, and labor disputes, Canadian National Railway's ongoing exports of oil products, grain, and fertilizer are expected to mitigate these pressures, ensuring long-term stability.
See More
Mixed US Stock Market with Energy Stocks Under Pressure
- Divergent Market Performance: The S&P 500 index fell by 0.07% while the Dow Jones Industrial Average rose by 0.54%, indicating a divergence in market trends, particularly with the Dow reaching a new high, reflecting increased investor confidence in certain sectors.
- Impact of Falling Oil Prices: Crude oil prices dropped over 3% amid optimism for a normalization of oil flows from the Middle East, which not only eased inflation expectations but also pushed the 10-year Treasury yield down to a 1.5-week low of 4.45%, positively affecting the bond market.
- Decline in Mortgage Applications: US MBA mortgage applications fell by 8.5% for the week ending May 22, with the purchase mortgage sub-index down 0.4% and the refinancing sub-index plunging 18.1%, indicating the suppressive effect of high interest rates on the housing market.
- Corporate Earnings Overview: As of now, 83% of the 475 S&P 500 companies that reported Q1 earnings have exceeded expectations, with overall earnings projected to rise by 12% year-on-year, but excluding the tech sector, the growth is only 3%, highlighting disparities across industries.
See More
