Investors will keep close watch on planned protests across U.S. cities on Saturday, amid heightened concerns following immigration raids in Los Angeles and developments in the Middle East.
The protests, organized by the "No Kings" coalition to oppose President Donald Trump's policies, are set to coincide on Saturday with a military parade in Washington marking the U.S. Army's 250th anniversary and Trump's 79th birthday. Trump on Tuesday warned against protests at the parade.
The protests also come on the heels of heightened geopolitical concerns after Israel's military strikes on Iran and have sparked a rush into safe havens such as gold and the dollar.
"The protests and the ongoing developments in Iran bear further watching," said Jack Ablin, chief investment officer at Cresset Capital.
The protests could negatively impact the markets from a psychological standpoint, said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
"These protests have been relatively peaceful but have the potential to spiral out of control and result in injuries, etc," he said.
Any damage to sentiment and the willingness to take risks could add to the challenge the S&P 500 faces in the near term as the index appears to have stalled after making big advances from its early April trade war-induced market swoon. The S&P 500 is about 20% above its April low, but is little changed over the last four weeks.
The benchmark stock index is about 2% shy of its record closing high reached in mid-February. The index was down about 1% on Friday afternoon.
Trump's decision last weekend to dispatch troops to Los Angeles over the objections of California Governor Gavin Newsom has sparked a national debate about the use of the military on U.S. soil and further polarized the country.
Americans are divided over Trump's decision to activate the military to respond to protests against his crackdown on migrants, with about half supportive of the move, according to a Reuters/Ipsos poll on Thursday.
For now, much of the market's attention remains fixated on events unfolding in the Middle East.
"I don't think there's a direct impact to the markets. It may come more on the confidence side, adversely impacting sentiment," Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions, in Boston, said.
