The stock market rattled on Wednesday as escalating tensions in the Middle East, a surge in oil prices, and lackluster earnings reports from industry giants Morgan Stanley and United Airlines triggered a widespread sell-off. The Dow Jones Industrial Average experienced a 1% decline, shedding 330 points, while the S&P 500 and the Nasdaq Composite faced steeper losses, plummeting by 1.3% and 1.6% respectively. In the wake of these developments, Treasury yields experienced an upswing, with the 30-year Treasury yield surpassing the 5% mark and the 10-year yield surpassing 4.9%, marking its highest level since 2006.
Market sentiment remained cautious as Israeli and Palestinian authorities exchanged accusations regarding an explosion at a Gaza hospital, further deepening the geopolitical uncertainty. The cancellation of a summit between Jordan and Arab leaders following the Gaza incident added to the atmosphere of instability. Oil prices surged by over 1%, fueled by Iran’s foreign minister advocating for an embargo against Israel. Crude oil futures ascended above $88 per barrel, while Brent crude traded at over $91 per barrel. The spike in fuel prices introduces an additional element of inflation for investors to weigh as they contemplate the Federal Reserve’s forthcoming decisions on interest rates.
Post-market, tech giants Tesla and Netflix took center stage in earnings reports. Investors closely monitored any potential impacts stemming from the prevailing environment of “higher for longer” interest rates. Among tech companies, shares of ASML suffered losses after the Dutch chip equipment manufacturer cautioned about stagnant sales due to customers scaling back orders amidst an uncertain economic landscape. Simultaneously, Nvidia and other semiconductor manufacturers experienced a downturn subsequent to the U.S. tightening restrictions on exports of AI chip technology to China, prompting analysts to seek clarity on the implications of these new regulations.
United Airlines bore the brunt of the stock market sell-off, witnessing a nearly 10% decline after presenting a bleak profit outlook. This downturn reverberated across other major airlines, causing a ripple effect on their share prices. The day’s events serve as a stark reminder of the persisting uncertainty and prudence that continue to shape global markets, presenting a challenging trading environment for investors worldwide.
Source: Yahoo Finance
