Wall Street ended lower Thursday, as the rising price of oil and the escalating tensions geopolitically in the Middle East dampened the investor’s sentiment. This clouded any prospects for rate reductions.
The S&P500 fell by 0.27%, to 6,606.49. Meanwhile, the Nasdaq Composite dropped 0.28% to 22090.69.
The Dow Jones Industrial Average fell 0.44% or 203.72 point to 46,021.43.
The three main indexes continued to decline for the second session in a row, but they have pared earlier steeper losses.
Inflation worries resurface after oil surge
The focus of investors remained on the impact that rising energy costs would have in terms of inflation, following the intensifying conflict between Iran, Israel and the United States.
The oil prices spiked in early session, after Iran attacked energy infrastructures in the area. This heightened fears about prolonged supply disruptions.
Brent crude closed up 1.2%, at $108.65 a barrel. This is its highest closing since July 20,22. US West Texas intermediate crude futures fell 0.2%, to $96.14 a barrel, after making gains earlier.
Recent remarks by Federal Reserve Chairman Jerome Powell reinforced concern about inflation.
Central bank rates were left unchanged but the central warned that geopolitical events continue to be uncertain.
According to CME’s FedWatch, traders now see few chances of a rate cut before the middle of 2027. This reflects a dramatic shift in expectations.
Stocks in tech and auto drag down the market
The market’s decline was largely due to losses in the major consumer and technology stocks.
Micron Technology fell 3.8% following a disappointing quarterly outlook. This was despite the fact that AI-related sales had driven strong growth earlier in this year.
Nvidia dropped 1% while Tesla fell 3.2% as US regulators intensified a probe of its Full Self-Driving System, citing performance concerns in low visibility conditions.
Materials and consumer discretionary stocks led the way with a drop of 1.55% in S&P500 sectors.
Newmont and Freeport McMoRan both fell by 3.3% as the precious metals prices retreated.
The market breadth was weak. On the S&P 500, declining stocks were outnumbered by advancers in a ratio of 1.4 to one.
Nasdaq registered 276 new lower lows compared to just 30 higher highs. This shows persistent pressure on the market.
Market outlook clouded by geopolitical risk
The geopolitical situation continued to influence the market, especially the disruption of the shipping route through the Strait of Hormuz. This is a major oil transit route.
Although oil prices have eased a little after remarks from Israeli Premier Benjamin Netanyahu that the conflict may end earlier than anticipated, there is still a high level of uncertainty.
As the war drags on, investor sentiment is changing. For the first two weeks of the conflict, the public thought that the situation was terrible. You can’t keep the Strait closed. It will cause major disruptions in supply. The end is near. “This is not sustainable,” said Peter Boockvar in CNBC’s report.
He added: “As the conflict enters its fourth week of fighting, investors are thinking that this may not end as quickly, and even if it did, commodity prices will never return to their levels before the start of the war.”
Markets are becoming more sensitive to changes in geopolitical instability and energy prices as inflation risk increases and expectations about monetary policies shift.
The post Dow Jones drops 200 points as Oil Surge Fuels Inflation Fears appeared first on The The Daily Hodl.
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