Wall Street closed lower as hopes for reopening the Strait of Hormuz faded following new demands from Iran and fresh attacks on oil tankers. The S&P 500 slipped 0.06% to 7,753.12 points, while U.S. crude oil surged about 5% to settle at $82.13 a barrel amid escalating Middle East tensions.
Major U.S. equity indexes finished moderately lower on Monday and Tuesday as optimism surrounding a potential diplomatic resolution in the Middle East gave way to renewed geopolitical friction. The blue-chip Dow, the benchmark S&P 500, and the tech-heavy Nasdaq all surrendered ground as investors reassessed the durability of supply chains and the stability of global energy markets.
Strait of Hormuz Disruptions Push Crude Prices Higher
“The direct impact is just the energy sector and … oil prices, and they’re just sticky here above where they were on February 27 before the conflict. So there’s clearly no transparency of the path to get back to where we were before the conflict started, and so that premium’s just being built in. So far, the world’s been able to work around it, but those workarounds don’t last forever.”
Tom Hainlin, investment strategist at U.S. Bank Wealth Management
Reflecting these pressures, U.S. crude oil jumped about 5% to settle at $82.13 a barrel. Market strategists noted that while previous flare-ups in the region often saw markets quickly shrug off geopolitical risk, the persistent stickiness of energy premiums continues to challenge investor risk appetite.
Technology Sector and Samsung Guidance Weigh on Equities
“The scale of earnings growth at Samsung is jaw-dropping and a sign of the AI times. Second quarter operating profit jumped 19-fold as it rode the surge in demand for chips. It’s the kind of performance most companies can only dream of. Unfortunately for Samsung, it just wasn’t enough for investors.”
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Compounding the tech-sector pullback, Intel fell 4.1% after announcing plans to raise $15 billion through a share sale, while Nvidia dropped 2.9% amidst separate reporting that financial firms Apollo Global and Blackstone are working with the chipmaker to assemble a $500 billion funding package for AI infrastructure development.
“We continue to see a reset in technology and a rotation into other areas of the market. After an exceptional run, expectations became very elevated, particularly in semiconductors. The encouraging part is that money is rotating into other sectors rather than leaving the market, which is generally a healthier development for the broader market.”
Keith Lerner, chief investment officer and chief market strategist at Truist
Investors are also closely watching macroeconomic indicators for clues regarding the Federal Reserve’s upcoming monetary policy path. Following data showing U.S. employers unexpectedly shed 23,000 jobs in July, traders priced in a 52% chance of an interest-rate hike in September, according to the CME FedWatch tool.
Wall Street Extends April Surge As The Strait of Hormuz Reopens
