Major stock market indexes strengthened and turned positive Monday after the massive surprise attacks on Israel from Hamas, prompting Israel to declare war. Market conditions improved in the last hour of trading.
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Israel was bombarded on Saturday by Hamas militants who staged the largest assault on the nation in 50 years. The unexpected attacks pushed Israel to quickly declare war, and it launched retaliatory strikes on Hamas throughout Palestinian communities.
Crude oil futures popped on the Israel-Hamas fighting and lifted oil stocks. Defense stocks also benefited from the conflict.
Major indexes started the day deep in the hole, but steadily improved and were in the black. The Nasdaq was up 0.5% in afternoon stock market action. The Dow Jones Industrial Average gained 0.6% and the S&P 500 climbed 0.7%. The small-cap Russell 2000 also added 0.7%.
All three major indexes remain well below their 50-day moving averages. The Dow sits under its 200-day moving average.
Funds Mixed; Bond Markets Closed
Volume fell on the New York Stock Exchange and Nasdaq compared with Friday’s trading at the same time of day in stock market action.
The Invesco QQQ Trust ETF (QQQ), which tracks the Nasdaq 100, shed 0.1%. The Innovator IBD 50 ETF (FFTY) bucked the trend and gained 0.5%.
Bond markets were closed Monday for Columbus Day/Indigenous Peoples Day. This week investors will get the CPI and PPI inflation reports as well as the Fed minutes from the September policy meeting.
Earnings season will kick off with Delta Air Lines (DAL) reporting on Thursday and financial firms BlackRock (BLK), JPMorgan Chase (JPM) and Wells Fargo (WFC) on Friday. Dow Jones name UnitedHealth (UNH) is another noteworthy firm due to report Friday.
Stock Action: Cybersecurity Stocks Rise; Cruise Stocks Sink
Stocks and ETFs with Israel exposure sold off with the Middle East conflict underway.
Cybersecurity stocks were strong, with Palantir Technologies (PLTR) climbing 4% higher and IBD 50 stock Okta (OKTA) adding more than 6%. One cybersecurity exception was Israeli-based CyberArk Software (CYBR), which sold off 0.4%.
Cruise line and travel stocks were caught in the crossfire Monday. Carnival (CCL) sold off more than 4% and Norwegian Cruise Line (NCLH) sank 2.3%. Both stocks tested their 200-day lines on their drops.
Airline stocks felt pressure as they canceled flights to Israel. Delta Air Lines (DAL), United Airlines (UAL) and American Airlines (AAL) stocks sold off in heavy trading.
Taser maker Axon Enterprise (AXON) stock spiked 4.4% after the U.S. Federal Trade Commission dropped an antitrust case against the company. Shares are in a cup-with-handle base with a 217.61 buy point.
Datadog (DDOG) sank 3.6% after BofA Securities downgraded the cloud security stock to neutral from a buy rating and cut its price target to 105 from 123.
Stock Market Movers: Defense Firms And Buffett Stocks Rally
Defense stocks rose solidly amid the Israel-Hamas fighting. Lockheed Martin (LMT) jumped more than 8% in huge volume. But up against its 50-day line, it found resistance.
Northrop Grumman (NOC) also rallied more than 10% in heavy trading and reclaimed its 200-day line. The stock was the biggest gainer on the S&P 500 Monday.
General Dynamics (GD) gapped up more than 8%, also retaking its 50- and 200-day lines. Finally, RTX (RTX) gained more than 4% but remains below its key moving averages.
Oil stocks rallied in heavy trading along with the increase in oil prices. Warren Buffett stock Occidental Petroleum (OXY) climbed 3.9%. Another Buffett holding and Dow Jones stock, Chevron (CVX), popped 2.7%.
Exxon Mobil (XOM) gained 3.2%, BP (BP) rose 2.3%, and Shell (SHEL) added 1.6%. In separate news, Exxon is preparing to buy shale company Pioneer Natural Resources (PXD) for roughly $60 billion. Exxon, Occidental and Chevron reclaimed their 200-day lines on Monday’s jump.
Other Stock Market Action
Elsewhere, IBD 50 and Leaderboard stock Zscaler (ZS) advanced 4.2% after Barclays raised its rating to overweight from equal weight and raised its price target to 190 from 176.
Blue Owl Capital (OWL) pulled back 0.6% after Oppenheimer downgraded the asset management stock to perform from outperform.
Mirati Therapeutics (MRTX) plunged more nearly 5% in huge volume following news that biopharmaceutical giant Bristol Myers Squibb (BMY) will buy the cancer therapy company for $58 per share. Shares of BMY fell 0.7% on the news.
Monday’s drop came after Mirati had soared more than 45% on Thursday in similarly large volume following speculation that the company might be acquired.
Spotify Technology (SPOT) dipped 2.6% after Redburn Atlantic downgraded the streaming music stock to neutral from buy and cut its price target to 160 from 170.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
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