Stocks worldwide saw a fresh wave of volatility, with major indices like the S&P 500, Nasdaq 100, and Dow Jones Industrial Average all falling. The S&P 500 dropped 0.4%, the Nasdaq 100 fell 0.6%, and the Dow Jones Industrial Average declined 0.4%. This broad market slide was primarily driven by increasing concerns over an escalation of the conflict in the Middle East, specifically the potential closure of the Strait of Hormuz, which could lead to severe energy disruptions. Despite this, the S&P 500 remains poised for its best month since 2023, buoyed by strong corporate profits and a resilient US economy, with nearly 80% of its firms exceeding first-quarter earnings estimates.
Oil prices surged in response to the geopolitical tensions, with Brent crude rising above $105 and West Texas Intermediate crude climbing 3.7% to $96.42 a barrel. President Donald Trump's rhetoric, including ordering the US Navy to target boats laying mines in the Strait and threatening Iran's infrastructure, further fueled market jitters. Gold also saw movement, with spot gold falling 1% to $4,694.79 an ounce, while cryptocurrencies like Bitcoin and Ether also experienced declines, with Bitcoin falling 1% to $77,694.76 and Ether dropping 3.2% to $2,316.35.
Bond markets were relatively subdued, though global yields remained near multi-year highs due to persistent inflation worries stoked by elevated energy prices. The yield on 10-year Treasuries advanced two basis points to 4.33%. Corporate news saw Intel Corp. surge on a strong outlook, boosting chipmakers, and Comcast Corp. exceeded first-quarter financial estimates. However, companies like Honeywell International Inc. cited the Middle East war as a drag on revenue, particularly in its process automation unit. Analysts noted that while volatility has increased, financial markets have shown relative resilience, with investors expecting hostilities to be short-lived, potentially creating attractive entry points for some market segments.
