Wall Street slid as traders priced in a Federal Reserve decision and a sharp rise in oil prices. Brent crude surged to around $90 after renewed fighting in the Middle East, raising worries about inflation and pushing bond yields higher. The higher yields made risk‑seeking investors nervous, pulling money out of stocks.
The tech market was also hit by a sell‑off in chipmakers, which dragged down the S&P 500. Investors are watching the earnings of Microsoft and Meta Platforms closely, as their large AI investments could prove costly if the market’s patience runs out.
President Donald Trump told Fox News that the United States would strike Iran hard following an attack on a military base in Jordan. The new clashes show how far Washington and Tehran are from resuming peace talks or ending the war that keeps the Strait of Hormuz closed.
The Fed is expected to keep rates unchanged in its two‑day meeting that ends on Wednesday, but traders fear a surprise hike if inflation remains stubborn. Paul Stanley of Arca said the Fed will likely reaffirm that it will not tolerate high inflation.
After the meeting, Fed Chairman Kevin Warsh will hold a press conference, while analysts say that the tech sector will remain the key focus for investors this summer, according to Matt Maley of Miller Tabak.
South Korea’s stock market suffered a sharp decline, with the Kospi falling 13% in a single session and hitting a record 33% drop for the month. SK Hynix’s disappointing earnings worsened worries about AI spending, and the index closed down 6%.
Other company updates: Ford Motor raised its profit outlook for the second time this year as SUV sales remain strong. Procter & Gamble gave a cautious outlook after quarterly results fell short of estimates, reflecting consumer retrenchment. Humana’s medical costs rose above expectations, adding pressure to the insurance sector. Biogen beat earnings expectations thanks to sales of new kidney and eye‑disease drugs. Bunge Global raised its full‑year profit outlook as biofuel demand grew amid volatile prices. Bloom Energy posted earnings that doubled expectations and lifted guidance. SK Hynix announced a $31 billion capital‑spend plan after a six‑fold profit jump, signaling concerns over AI capacity over‑investment.
At 10:09 a.m. New York time, the S&P 500 was down 0.5% and the Dow fell 1.3%. The 10‑year Treasury yield rose to 4.62%, while Germany’s and Britain’s yields edged up. West Texas Intermediate crude rose 6.5% to $84.42 a barrel. Spot gold fell 0.7% to $4,001.26 an ounce.