NEW YORK/LONDON, Aug 14 (Reuters) – U.S. and European shares fell on Friday and oil prices rose more than $1 a barrel as markets monitored tense U.S.-Iran talks and digested new data that dented expectations for a Federal Reserve rate hike next month.
Faltering talks to end the Iran war left oil and gas prices poised for sizeable weekly gains. The U.S. threatened to ramp up economic pressure on Iran, including extending a naval blockade.
U.S. consumer sentiment deteriorated in early August amid the rising cost of living because of the Middle East conflict, a survey showed on Friday.
The U.S. dollar fell on a surprise drop in U.S. retail sales, supporting gold prices. The data further reduced expectations of a Federal Reserve rate hike at next month's meeting.
U.S. Treasuries fell on Friday after an initial rally driven by the retail sales data lost momentum.
The S&P 500 fell from record highs, under pressure as shares in chip equipment maker Applied Materials declined, to end the session down 0.17% at 7,785.76 points. Chipmakers including Broadcom and Intel also dropped.
The Nasdaq declined 0.28% to 26,729.16 points, while the Dow Jones Industrial Average declined 0.20% to 53,732.41 points.
"A lot of the drivers in the market right now are around various parts of AI," said Thomas Martin, senior â portfolio manager at GLOBALT Investments in Atlanta.
European shares finished lower on Friday and snapped a four-week winning streak, as rising crude prices and renewed geopolitical tensions offset support from a resilient earnings season.
MSCI's gauge of stocks across the globe fell 0.79 points, or 0.07%, to 1,160.01.
MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.29% higher at 1,640.08.
"The markets round out the week on a positive note, with relatively thin event risk on the economic and corporate calendar. But of course, itâs a Friday, and the typical pattern has been for geopolitical risks, or at least bombastic rhetoric, to pick up between the U.S. and Iran going into the weekend," Capital.com strategist Kyle Rodda said.
"Currently, the geopolitical uncertainty remains the only major macro roadblock to a market experiencing strong tailwinds from earnings and the monetary policy outlook," Rodda said.
Brent crude oil futures settled at $88.52 a barrel, up 1.67%. U.S. futures finished at $82.40, up 1.42%.
John Sidawi, senior portfolio manager for fixed income at Federated Hermes, said a puzzling feature of markets in recent months has been the growing disconnect between geopolitical uncertainty and asset price volatility.