Later in the day, when asked about Biden’s comments, a Pentagon spokeswoman said the US was discussing with Israel “what a response to Iran would look like”.

“It’s more about trying to understand what their response might be,” spokeswoman Sabrina Singh said in a briefing.

Overnight on Wall Street, the S&P 500 lost 0.2 per cent, The Dow Jones fell 184.9 points, or 0.4 per cent, and the Nasdaq Composite finished flat.

Data on Thursday showed that the number of Americans filing new applications for unemployment benefits rose marginally last week.

Still, Hurricane Helene and strikes at ports could distort the labour market picture in the near term. The key report this week for investors could be Friday’s employment report for September.

“It looks like investors are cautious ahead of the jobs report tomorrow,” said Adam Sarhan, chief executive of 50 Park Investments in New York.

“It’s normal to see some profit-taking after a big rally like we’ve had over the last two, three weeks.”

Investors are eager for more data on the labour market after the Federal Reserve last month cut its benchmark interest rate by an unusually large 50 basis points, the first reduction in borrowing costs since 2020.

The Cboe Volatility index, Wall Street’s fear gauge, was higher.

Gold prices rebounded from early losses as the dollar strengthened against major currencies. Spot gold rose 0.09 per cent on the day to $US2658.87, hovering near record highs.

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In currencies, the dollar index gained 0.26 per cent to 101.91. The euro was slightly down at $1.1029, and not far from Wednesday’s low of $1.10325, a level last seen on September 12.

European stocks finished down 0.9 per cent as investors digested weak business activity survey data from the bloc. MSCI’s gauge of stocks across the globe fell 0.6 per cent to 840.49.

Treasury yields rose after the jobless claims data and service sector report. Two-year Treasury yields were last up at 3.6951 per cent on Thursday, while benchmark 10-year yields were at 3.831 per cent.

Markets imply a 35 per cent chance the Fed will cut interest rates by another 50 basis points in November, compared with almost 60 per cent last week. Markets have around 70 basis points of easing priced in by year-end.

With Reuters, Bloomberg

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