United States stocks finished mixed on Wednesday (Thursday AEST) after President Donald Trump declared an interim agreement aimed at ending the conflict with Iran was "over", reigniting geopolitical tensions and lifting oil prices, while gains in semiconductor stocks helped the Nasdaq close higher.
Trump, speaking at a NATO summit in Turkey, said he had no interest in further negotiations with Iran and warned Washington would likely carry out additional strikes later on Wednesday.
His comments marked the latest twist in a series of shifting signals over the conflict, with investors caught between repeated hopes for diplomacy and renewed threats of military escalation.
The Dow Jones Industrial Average fell 576.8 points, or 1.1%, to 52,348.4. The S&P 500 lost 21.2 points, or 0.3%, to finish at 7,482.7, while the Nasdaq Composite added 52.0 points, or 0.2%, to close at 25,870.7.
Technology shares were mixed. SpaceX slipped 0.8%, marking its lowest close since its Wall Street debut on 12 June.
Microsoft and Alphabet each fell more than 1%, while Meta Platforms lost 2%.
Chipmakers outperformed after Apple announced plans to spend more than US$30 billion under a chip supply agreement reached earlier this week with Broadcom.
Broadcom rallied 4.8%, while Nvidia gained 3.7% after The Information reported China plans to allow its leading artificial intelligence companies to purchase a limited number of the company's H200 AI chips.
Oil prices surged after Trump's remarks, with Brent crude futures settling 5.2% higher, boosting energy stocks. Occidental Petroleum climbed 3.7%, Devon Energy gained 2.1%, and ConocoPhillips advanced 2.1%.
The rise in crude prices weighed on travel-related stocks amid concerns higher fuel costs could pressure earnings. United Airlines fell 1.6%, Delta Air Lines lost 1.5%, Carnival dropped 3.9%, and Norwegian Cruise Line declined 1.9%.
Treasury yields also moved higher as the sell-off extended into the bond market.
The renewed escalation threatened to derail the strong equity rally that has seen the S&P 500 gain about 9% so far this year despite volatility triggered by the Middle East conflict.
Investors also worried that another sharp rise in oil prices could reignite inflationary pressures and complicate the Federal Reserve's policy outlook.
The International Monetary Fund on Wednesday lowered its 2026 global growth forecast to 3%, citing persistent risks from the conflict in the Middle East.
Meanwhile, minutes from the Federal Reserve's latest policy meeting showed inflation remained a key concern for policymakers, who adopted a more streamlined policy statement under Chairman Kevin Warsh.
According to the CME Group FedWatch Tool, traders continue to expect a high probability of a Federal Reserve interest rate hike by December.
On the bond markets, the yield on the 10-year U.S. Treasury rose to 4.581%, while the two-year yield increased to 4.216%.
