US sharemarkets fell on Wednesday, with the S&P 500 snapping a nine-session winning streak as rising oil prices, higher bond yields and escalating tensions in the Iran war weighed on investor sentiment.
The Dow Jones Industrial Average dropped 620.72 points, or 1.21%, to close at 50,687.07. The S&P 500 fell 0.74% to 7,553.68, while the Nasdaq Composite declined 0.89% to finish at 26,853.98.
Technology and artificial intelligence-related stocks led the market lower. Nvidia and Dell Technologies each fell more than 3%, while Microsoft lost 3% and Oracle dropped more than 5%.
Investors also responded to renewed military activity in the Middle East after the United States and Iran launched fresh strikes. Kuwait’s military reported intercepting multiple missiles and drones after attacks targeted the country, while US Central Command said American forces had intercepted Iranian ballistic missiles and drones before conducting what it described as self-defence strikes on Qeshm Island.
President Donald Trump said Iran had agreed not to pursue nuclear weapons but cautioned that Tehran could still change its position.
The escalation raised concerns that the conflict could prolong inflationary pressures through higher energy costs and complicate the outlook for interest rates.
Economic data also added to those concerns. Stronger-than-expected US employment data and resilient services sector activity reinforced expectations that the Federal Reserve may have less scope to ease monetary policy.
Oil prices rose sharply as markets reacted to renewed military action involving the United States and Iran. US West Texas Intermediate crude gained 2.41% to settle at US$96.02 a barrel, while Brent crude rose 1.89% to close at US$97.81.
Prices initially surged following reports of attacks in Kuwait before giving back some gains later in the session.
Bond yields also moved higher as stronger economic data and rising energy prices reinforced inflation concerns. The US 10-year Treasury yield approached 4.5%, while the 30-year yield moved towards 5%.
Markets are now pricing in the possibility that the Federal Reserve could deliver at least one further rate increase before year end.
Bitcoin continued to weaken, falling below US$66,000.
Australian Market Outlook
Australian shares are expected to open lower following weakness on Wall Street and renewed concerns about the impact of the Iran war on inflation and global growth.
S&P/ASX 200 futures are down 75 points, or 0.9%, to 8,734.
Locally, April trade data will be released at 11.30am AEST.
Treasury Wine Estates is scheduled to hold an investor day, while Reserve Bank of Australia Governor Michele Bullock, alongside assistant governors Sarah Hunter and Christopher Kent, will appear before the Senate Economics Legislation Committee at 3.00pm AEST.
