Major U.S. stock indexes fell sharply on Wednesday as renewed tensions in the Middle East triggered fresh concerns among investors following President Donald Trump’s announcement that an interim ceasefire agreement with Iran had collapsed.
At the opening bell, the Dow Jones Industrial Average fell 166.7 points, or 0.31%, to 52,758.47. The S&P 500 fell 27.3 points, or 0.36%, to 7,476.54, while the Nasdaq Composite dropped 114.0 points, or 0.44%, to 25,704.66.
Market sentiment weakened after Trump said during a NATO summit in Turkey that the temporary ceasefire aimed at ending the conflict with Iran was “over.” However, he indicated that diplomatic efforts could continue, leaving the possibility of further negotiations open.
The latest escalation followed Iranian strikes on vessels passing through the strategically important Strait of Hormuz, one of the world’s busiest energy shipping routes. The attacks reignited fears over disruptions to global oil supplies and increased uncertainty across financial markets.
The United States had launched major strikes against Iran earlier this week after attacks on ships in the region. The military action was followed by retaliatory strikes targeting American bases in the Gulf, intensifying concerns that the conflict could expand further.
“After a long and eventful first half of the year dominated by the US-Israel war on Iran and Trump’s constant flip-flopping, the last thing investors, and frankly anyone else, needed with the summer holidays approaching was a return of the same geopolitical environment,” said Fawad Razaqzada, market analyst with Forex.com.
“Unfortunately, it looks like we could be heading back to that.”
Energy markets reacted immediately to the renewed hostilities. Crude oil prices, which had recently eased back toward levels seen before the conflict, surged again as traders assessed the risk of supply disruptions.
International benchmark Brent crude rose more than 5% to around $78 a barrel, while the U.S. benchmark West Texas Intermediate (WTI) also gained about 5% before both benchmarks trimmed some of their gains during afternoon trading.
Adding further pressure to oil markets, Washington revoked a temporary sanctions waiver that had allowed continued purchases of Iranian oil, increasing uncertainty over future global crude supplies.
The rise in energy prices added to investor concerns about inflation, interest rates and corporate costs.
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