Wall Street Slips As Middle East Tensions Keep Investors On Edge

Wall Street’s main indices declined on Thursday, reversing gains from the previous session, as investors remained cautious amid conflicting signals over the Middle East conflict and prospects of de-escalation.

U.S. President Donald Trump said Iran was desperate to strike a deal to end the fighting and urged Tehran to “get serious” about negotiations. However, Iran’s Tasnim News Agency reported that Tehran had officially responded to the United States’ 15-point proposal, citing sources familiar with the matter, even as Iran publicly denied any negotiations.

The mixed messaging left markets uncertain, particularly as hopes for restoring shipping through the Strait of Hormuz remained unclear.

“Hearing a lot of different things ⁠come out, you have the market trying to figure out exactly what's going on. We're watching oil prices ... We're still a little bit cautious there because some of the downside scenarios aren't good for the global economy,” said Jack Herr, primary investment analyst at GuideStone.

“But overall if we can get a quick resolution of this thing, the backdrop for another good year in the market is there with some of the fundamentals and growth numbers we're seeing,” he added.

Indices Fall; Tech Stocks Lead Declines

At 9:40 AM ET, the Dow Jones Industrial Average fell 250.43 points, or 0.54 per cent, to 46,179.06. The S&P 500 lost 56.82 points, or 0.86 per cent, to 6,535.08, while the Nasdaq Composite dropped 262.81 points, or 1.20 per cent, to 21,667.02, according to a Reuters report.

Technology stocks led the losses, with the S&P 500 tech index falling 1.3 per cent.

Memory chipmakers extended their decline, with Micron Technology, SanDisk and Western Digital down between 3.3 per cent and 4.8 per cent.

Meta Platforms and Alphabet dropped 3.2 per cent and 2 per cent, respectively, dragging the communication services index lower. The Philadelphia SE Semiconductor index lost nearly 2 per cent.

OECD Flags Economic Risks

The Organisation for Economic Co-operation and Development (OECD) warned that the escalating conflict in the Middle East has disrupted a stronger global growth trajectory.

It cautioned that any closure of the Strait of Hormuz could sharply push up inflation.

Rate Cut Expectations Recede

Central banks face increasing uncertainty, with money market participants no longer pricing in any easing by the U.S. Federal Reserve this year.

Before the Iran conflict, two rate cuts had been expected, according to the CME Group’s FedWatch Tool.

Data released on Thursday showed that new applications for U.S. unemployment benefits rose slightly last week, indicating a stable labour market and giving the Fed room to hold rates steady while assessing the impact of the conflict.

Comments from Federal Reserve officials Lisa Cook, Stephen Miran, Michael Barr and Philip Jefferson are expected later in the day.

Stock Movers And Market Breadth

Among individual stocks, Olaplex surged 50 per cent after Germany’s Henkel agreed to acquire the hair-care brand in a $1.4 billion deal.

U.S.-listed gold miners declined as bullion prices fell more than 1 per cent, with Sibanye Stillwater down 2.2 per cent and Harmony Gold shedding 1.1 per cent.

Market breadth remained weak, with declining stocks outnumbering advancers by a 2.78-to-1 ratio on the NYSE and by 2.38-to-1 on the Nasdaq.

The S&P 500 recorded nine new 52-week highs and two new lows, while the Nasdaq Composite posted 14 new highs and 75 new lows.