US equities slide as Middle East tensions and oil surge weigh on markets
The S&P 500, Dow Jones, and Nasdaq 100 all closed sharply lower on Wednesday as escalating military exchanges between the US and Iran lifted crude oil costs and pressured energy-intensive sectors.
US stock markets closed sharply lower on Wednesday, driven by escalating geopolitical tensions in the Middle East and rising crude oil prices. The S&P 500 fell 1.62%, the Dow Jones Industrial Average dropped 1.87%, and the Nasdaq 100 declined 1.98%. Tensions intensified after President Trump pledged further strikes on Iran following an exchange of military attacks involving US and Iranian forces.
Crude oil prices rose more than 2%, weighing on airline and trucking stocks, while energy producers gained. Technology and chipmaker stocks retreated, though Apple rose slightly. US May consumer price index data came in as expected, easing some inflation concerns. Overseas markets also settled lower, with the Euro Stoxx 50, Shanghai Composite, and Nikkei all closing down.
The market volatility followed President Trump’s pledge of further strikes on Iran after an exchange of military attacks between US and Iranian forces. The US stated it had completed an operation involving fighter jets striking Iranian air defenses and radar sites near the Strait of Hormuz, in retaliation for Iran shooting down a US Apache helicopter. Iran responded by launching missiles at four US military targets and firing drones at the main US naval base in Bahrain and Ali Al Salem air base in Kuwait.
While energy producers benefited from crude oil prices rising more than 2%, airline and trucking stocks suffered. Chipmakers, AI-infrastructure stocks, and the Magnificent Seven technology stocks all retreated on Wednesday, pressuring the overall market. ON Semiconductor and Qualcomm closed down more than 6%, while Nvidia and Tesla fell more than 3%. Apple was an exception, closing up 0.35%.
Inflation concerns were partially eased by US May consumer price index (CPI) data that met expectations. The US May CPI rose 4.2% year-on-year, the fastest pace in three years, while the core CPI rose 2.9%, the fastest increase in seven months. US Treasury 10-year note yields rose slightly, but losses were limited by strong demand in a $39 billion auction of 10-year notes.
Global markets mirrored the US decline. The Euro Stoxx 50 fell to a 2.5-week low, closing down 0.66%, while China’s Shanghai Composite dropped 0.42%. Japan’s Nikkei Stock Average closed down 1.89%. European government bond yields also moved higher, with the 10-year German Bund yield climbing to a 2.5-week high.
