US equity futures declined, with S&P 500 contracts down 1.1% and Nasdaq 100 contracts retreating 1.6% by 6:05 a.m. in New York. This downward trend follows Tuesday's losses, which were driven by a selloff in chipmakers amid worries about the valuation justification of massive artificial intelligence investments. The dip in stocks comes after President Donald Trump's announcement that the tentative ceasefire with Iran had ended, raising fears of renewed conflict in the Middle East and increased geopolitical risk.
Trump's declaration that the ceasefire was "over" and a "waste of time" was made at the NATO summit in Ankara, Turkey. The comments sent the price of West Texas Intermediate (WTI) crude oil jumping over 5%, while Brent crude advanced 6.3% towards $79 a barrel. Bond markets also reacted negatively, with Treasuries falling across the curve as increased oil prices reignited inflation concerns; the benchmark 10-year yield rose two basis points to 4.58%. The US had previously struck over 80 targets in Iran and revoked a waiver allowing Iranian oil sales in response to attacks on ships near the Strait of Hormuz.
Several factors contributed to market unease. On Tuesday, Wall Street's main stock indexes closed lower, led by Intel, which plunged over 9%, and Sandisk, which slumped more than 7% due to concerns over chip and AI infrastructure stocks despite a strong forecast from Samsung Electronics. Airlines and other travel-related stocks, such as United Airlines Holdings and Carnival, also fell over 3% as oil prices rose. Investors are now awaiting the release of the Federal Reserve's June meeting minutes for further clarity on monetary policy, especially after Fed officials left interest rates unchanged but expressed growing concern about rising price pressures. New York Fed President John Williams, however, expressed optimism about the near-term inflation outlook due to anticipated energy price declines.
