THE CITY REJECTS YOU: Jack Hawksmoor can use Stealth. At the beginning of your turn, if it's your 3rd turn or later, deal 1 penetrating damage to each other character occupying any player's starting area.

Does this hurt Friendlies? It appears to me that it does.

It will damage any character (other than Jack himself) in any starting area. Yep, that includes characters friendly to Jack.