US sharemarkets fell sharply on Wednesday as escalating concerns over the Iran war and renewed weakness in semiconductor stocks weighed on investor sentiment.
The Dow Jones Industrial Average dropped 953.33 points, or 1.87%, to close at 49,918.78. The S&P 500 fell 1.62% to 7,266.99, while the Nasdaq Composite declined 1.98% to finish at 25,169.50.
Markets came under pressure after President Donald Trump signalled growing frustration with negotiations between the United States and Iran, warning that Tehran had taken too long to reach an agreement and declaring that the US would be attacking Iran “very hard”.
The comments followed fresh US strikes on Iran after American forces said they had responded to the downing of a US Army Apache helicopter near the Strait of Hormuz earlier in the week.
Technology and semiconductor stocks led the market lower. Micron Technology, Advanced Micro Devices and Broadcom all declined as the sector’s recent correction deepened. The iShares Semiconductor ETF fell more than 3%, extending losses after last week’s 10% plunge.
Nvidia dropped 3.7%, while Tesla lost 3.8%. Amazon, Alphabet and Meta each fell more than 2%. Apple was the only member of the Magnificent Seven to finish higher, rising 0.4%.
Investors also continued repositioning ahead of SpaceX’s public listing on Friday, which is expected to become the largest IPO in market history.
Fundstrat’s Tom Lee said the offering was likely creating short-term selling pressure across US equities as investors raised cash to participate in the listing. Vanda Research also reported signs that retail investors were rotating out of popular artificial intelligence stocks ahead of the IPO wave.
Despite the broader weakness, inflation data offered some encouragement. Core consumer prices rose 0.2% in May, below expectations for a 0.3% increase, although headline annual inflation climbed above 4% for the first time in three years.
Oil prices rose as investors reacted to escalating military activity between the United States and Iran.
US West Texas Intermediate crude gained 2.07% to settle at US$90.03 a barrel, while Brent crude rose 1.8% to US$93.10.
Markets remain focused on the potential impact of the Iran war on energy supplies and inflation, particularly if negotiations break down and hostilities intensify further.
Treasury yields remained elevated as investors weighed the inflationary implications of higher oil prices and the possibility that interest rates may remain higher for longer.
Although core inflation was slightly softer than expected in May, headline inflation accelerated above 4%, reinforcing concerns that energy costs could continue feeding through to broader prices.
Australian Market Outlook
Australian shares are expected to open lower following the sharp decline on Wall Street and renewed uncertainty surrounding the Iran war.
S&P/ASX 200 futures are down 65 points, or 0.8%, to 8,601.
Technology stocks may remain under pressure after another round of selling across US semiconductor and artificial intelligence-related companies overnight.
Investor attention is also likely to remain focused on SpaceX’s expected market debut on Friday. The IPO has become a dominant theme on Wall Street, with investors continuing to rotate capital away from existing technology winners to fund new allocations.
Market participants will also continue monitoring inflation trends and bond yields as they assess the outlook for interest rates and global growth.
