Wall Street’s main indexes fell sharply on Thursday and the Nasdaq confirmed a correction as investors worried about escalation in the U.S.-Israeli war against Iran, which has sent oil prices soaring and exacerbated inflation concerns. The US President said Iran must make a deal with the U.S. or face a continued onslaught, while warning that taking control of Iran’s oil was an option. A senior Iranian official told Reuters the U.S. proposal for ending nearly four weeks of fighting is “one-sided and unfair,” while stressing that diplomacy had not ended.
The lack of clear signs of progress sent oil prices soaring, with U.S. crude futures CLc1 settling up 4.6% compared with a 5.7% advance for Brent futures LCOc1. As a result, stock indexes erased gains from Wednesday when investors had been betting on a de-escalation in the war, which has disrupted oil shipments through the Strait of Hormuz.
According to preliminary data, the S&P 500 .SPX .SPX lost 114.79 points, or 1.74%, to end at 6,476.89 points, while the Nasdaq Composite .IXIC .IXIC lost 513.56 points, or 2.34%, to 21,416.27. The Dow Jones Industrial Average .DJI .DJI fell 481.68 points, or 1.04%, to 45,955.00. The technology-heavy Nasdaq closed down more than 10% from its October 29 closing record high, confirming it has been in a correction since that date. Most of the S&P 500’s 11 major industry sectors lost ground. Energy .SPNY .SPNY was the biggest gainer, while the biggest laggards included communications services .SPLRCL .SPLRCL and technology .SPLRCT .SPLRCT .META, ALPHABET DROP AFTER VERDICTS
The communications index was under pressure after jurors found Meta META.O META.O and Alphabet’s GOOGL.O GOOGL.O Google liable in the first two trials from a growing wave of lawsuits accusing social media firms of harming children. In technology, chip stocks were a big drag with the Philadelphia Semiconductor Index .SOX .SOX tumbling after three sessions of gains. Leading declines in the Dow were shares of artificial intelligence chip leader Nvidia NVDA.O NVDA.O .
The conflict in the Middle East has knocked the global economy off a stronger growth path, the OECD warned on Thursday, with the near-closure of the Strait of Hormuz threatening to push inflation sharply higher. With high oil prices fanning inflation fears, central banks are in a tough spot regarding interest rates, with traders no longer pricing in any easing from the U.S. Federal Reserve this year. Two rate cuts had been expected before the Iran conflict erupted, according to the CME Group’s FedWatch Tool.
Earlier, data showed new applications for U.S. unemployment benefits rose slightly last week, suggesting a stable labor market and giving the Fed scope to hold rates steady while monitoring the impact of the Iran war.
U.S.-listed shares of gold miners, including Sibanye Stillwater SBSW.N and Harmony Gold HMY.N, fell as bullion prices XAU= lost ground.
Reporting by Sinéad Carew in New York, Purvi Agarwal and Twesha Dikshit in Bengaluru; Editing by Sherry Jacob-Phillips, Maju Samuel, Rod Nickel.
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