United States benchmark averages endured another volatile session on Tuesday (Wednesday AEDT) as escalating tensions in the U.S.-Iran conflict rattled investors, sending oil prices sharply higher and fuelling concerns about inflation and interest rates.
The Dow Jones Industrial Average fell 403.5 points, or 0.8%, to close at 48,501.3. The S&P 500 declined 65.0 points, or 0.9%, to 6,816.6, while the Nasdaq Composite shed 232.2 points, or 1%, to settle at 22,516.7.
Markets swung throughout the session as investors weighed the prospect of a prolonged conflict in the Middle East, with the CBOE Volatility Index — often referred to as Wall Street’s fear gauge — climbing to its highest level since November.
Comments from President Donald Trump later in the day provided some reassurance, tempering earlier losses.
In a post on Truth Social, Trump said the U.S. Navy would escort tankers through the Strait of Hormuz if required, seeking to calm fears over potential disruptions to global energy supplies.
"Effective IMMEDIATELY, I have ordered the United States Development Finance Corporation (DFC) to provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf.
"This will be available to all Shipping Lines. If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible.
“No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD. The United States’ ECONOMIC and MILITARY MIGHT is the GREATEST ON EARTH — More actions to come.”
Energy markets remained at the centre of investor anxiety. Brent crude settled up 4.7%, well off intraday highs but following a 6% surge on Monday.
West Texas Intermediate rose 4.68% after also climbing 6% in the prior session. Both benchmarks had earlier advanced more than 9% during Tuesday’s trading.
The initial spike in oil prices pushed Treasury yields higher, reflecting fears that renewed energy-driven inflation could complicate the Federal Reserve’s expected path towards further rate cuts. However, as crude pared gains, bond yields also retreated from their session highs.
The 10-year yield rose 0.7% to 4.063%, while the two-year yield increased 0.9% to 3.508%.
As the conflict entered its fourth day, several developments hinted at the potential for further escalation. The U.S. embassy in Riyadh was reportedly struck by drones amid intensified Iranian attacks on Saudi Arabia. The State Department ordered evacuations of personnel from Bahrain, Iraq and Jordan.
Tehran-backed Hezbollah launched missiles and drones towards Tel Aviv, while concerns mounted over how long Gulf states such as the United Arab Emirates could sustain their air defences against continued barrages.
Major technology names, including Nvidia, which had helped drive Monday’s intraday rebound, retreated. U.S. memory stocks were also under pressure, mirroring notable declines among memory chipmakers in South Korea.
In corporate news, shares of Blackstone dropped 3.8% after reports that one of its private credit funds experienced US$1.7 billion in net outflows during the first quarter.
