US stocks experienced a downturn as investors reacted to President Donald Trump's declaration that the tentative ceasefire with Iran was "over" and a "waste of time." This announcement followed new US strikes against Iran and the revocation of a waiver allowing Iranian oil sales, intensifying geopolitical concerns. The S&P 500 declined by 0.7%, testing its 50-day moving average, while the tech-heavy Nasdaq 100 retreated 0.6% by midday in New York. Energy stocks, including Chevron Corp., Exxon Mobil Corp., Venture Global Inc., and Diamondback Energy Inc., saw gains of at least 2% as oil prices soared.
Brent crude oil surged by 8% to top $80 a barrel, reaching its highest level since June 22. This spike in oil prices, combined with increased conflict in the Strait of Hormuz where Iran attacked three vessels and the US responded by striking over 80 targets, pushed bond yields higher. The 10-year US Treasury bond yield rose by 4 basis points to 4.57%, while the 30-year bond yield was also up. Market strategist Ed Yardeni warned that the renewed US-Iran tensions risk accelerating price growth, potentially compelling the Federal Reserve to raise interest rates.
Despite the initial market apprehension, some analysts viewed the pullback as a dip-buying opportunity. Brian Nick, head of portfolio strategy at Newedge Wealth LLC, noted that investors who had bought equities in the spring were generally rewarded and suggested that policy announcements causing market volatility tend to be quickly reversed. The broader market saw some support from strength in chipmakers and AI-infrastructure stocks, which recovered some of their previous day's losses. Analysts are also anticipating a strong second-quarter earnings season for S&P 500 companies, which could provide further support for stocks. However, other market strategists like Michael Field of Morningstar indicated that with no major earnings reports due soon, there might be little immediate respite for markets from the negative news flow.
