S&P500: Insurance Stocks Slide on Wildfire Losses, Energy Rallies on Oil Spike

Markets Slide as Wildfires, Earnings, and Oil Prices Dominate Headlines

U.S. stocks were under pressure Friday as a mix of devastating wildfires in California, surging energy prices, corporate earnings surprises, and sector-specific losses weighed on markets. The Dow Jones Industrial Average fell 550 points, or 1.3%, while the S&P 500 lost 1.5%, and the Nasdaq Composite dropped 2%. Insurance stocks led the declines, while energy stocks rallied on spiking oil prices. Walgreens, Delta, and tech stocks added to the day’s volatility, leaving traders grappling with a range of market-moving factors.

Insurance Stocks Tumble as Wildfire Losses Mount

Shares of insurers dropped sharply as the Los Angeles wildfires raised concerns about historic losses. Allstate and Chubb declined 4%, while AIG and Travelers fell about 2% each. Analysts at JPMorgan estimated insured losses could top $20 billion, far surpassing the $12.5 billion from 2018’s Camp Fire. High-value properties in areas like Pacific Palisades, where over 1,000 structures have been destroyed, are amplifying the potential payouts. Reinsurers Arch Capital Group and RenaissanceRe Holdings also fell, down 2% and 1.5%, respectively, as rising loss projections increased risk across the sector.

Energy Stocks Rally on Oil Price Surge

Energy stocks outperformed as oil prices jumped more than 4%. Brent crude broke above $80 per barrel, driven by new U.S. sanctions targeting Russia’s oil industry, which could disrupt supply chains.

Devon Energy rose 2%, while EOG Resources gained 2.5%, contributing to the sector’s 1% climb. The sanctions, aimed at curbing Russia’s oil trade, bolstered energy markets and offset losses elsewhere in the S&P 500.

Walgreens Soars on Earnings Beat

Walgreens shares surged over 20% after reporting better-than-expected fiscal first-quarter results. Adjusted earnings per share of $0.51 exceeded the $0.37 forecast, while revenue rose 7.5% to $39.46 billion. The company reaffirmed its full-year guidance, highlighting progress in cutting costs and closing underperforming stores. Although it reported a net loss tied to restructuring efforts, the market responded positively to signs of stabilization in its core pharmacy operations.

Delta Leads Airline Gains with Optimistic Forecast

Delta shares rose 9% after the airline posted strong fourth-quarter results and forecasted record financial performance for 2025. Adjusted earnings per share of $1.85 beat expectations, while revenue rose 9% year-over-year. CEO Ed Bastian cited strong travel demand and growing revenue from premium services as key drivers. The upbeat outlook also lifted rival United Airlines, signaling continued strength in the sector.

Tech Stocks Drag on Nasdaq

The Nasdaq struggled as technology stocks faced heavy losses, falling 2.6%. Higher Treasury yields, driven by stronger-than-expected December jobs data, weighed on growth-sensitive names. Nvidia fell 3.9%, while Palantir lost 3.4%. The robust labor market, with 256,000 jobs added in December, reduced hopes for rate cuts and pressured high-valuation sectors.

What’s Next for Traders?

Next week’s Consumer Price Index (CPI) report is expected to be a key driver of market sentiment, offering insight into inflation trends and the Federal Reserve’s next moves. Earnings season will also intensify, with results from tech and consumer sectors in focus. Traders should prepare for potential volatility as economic data and corporate results drive the market’s direction.

More Information in our Economic Calendar.