Dow falls 600 points, oil surges after Trump says Iran ceasefire is ‘over’
President Trump declared the end of the ceasefire with Iran, causing stocks to plummet and oil prices to soar to nearly $80 a barrel. The US is preparing for another night of strikes in response to Tehran’s attacks on vessels in the Strait of Hormuz.
The Dow Jones Industrial Average dropped 1.3%, or 693 points, by 10:40 a.m. ET, while the S&P 500 and Nasdaq also experienced declines of 0.7% and 0.5%, respectively.
Brent crude oil futures spiked 7.5% to $79.71 a barrel, with West Texas Intermediate crude climbing 7.2% to $75.52 a barrel.
Gasoline prices averaged around $3.80 per gallon on Wednesday, according to AAA. The tensions between the US and Iran have kept prices relatively stable, and the situation in the region could prevent a drop below $3 per gallon.
Trump expressed his dissatisfaction with Iran at a NATO summit, stating that he believes the preliminary peace deal is over and that further action will be taken. He mentioned hitting Iran hard again after the recent strikes.
Last month, Trump initiated a 60-day period for the US and Iran to reach a final agreement on various issues, including Iran’s nuclear program and sanctions relief.
The US military conducted overnight strikes against Iran in response to attacks on commercial ships near the strait, which were seen as violating the memorandum.
Robert Edwards, chief investment officer of Edwards Asset Management, noted that the market’s reaction to the geopolitical tensions is significant. He believes any downward movement in stocks in the coming weeks presents a buying opportunity.
Energy stocks rose as investors anticipated increased earnings from major industry players such as ConocoPhillips, Marathon Petroleum, Chevron, and Exxon Mobil.
On the other hand, tech stocks, particularly chipmakers, continued to decline as concerns about overspending on future technologies persist.
Shares in Samsung, Intel, and AMD experienced declines of 6.3%, 2.6%, and 0.7%, respectively.
Investors are awaiting the release of the Federal Reserve’s June minutes for insights into Kevin Warsh’s first meeting as chairman. The shift from rate cuts to rate hikes has been noted in the long-term outlook, according to CME FedWatch.
