Wall Street Retreats, 9-Day Rally Ends as Oil and Yields Surge
US stocks weakened on Wednesday (June 3), ending the S&P 500's nine-day rally, amid concerns that the US-Iran conflict would continue to fuel inflation through rising energy prices. The Dow Jones Industrial Average fell 620.72 points (1.21%) to 50,687.07, the S&P 500 fell 0.74% to 7,553.68, and the Nasdaq Composite Index fell 0.89% to 26,853.98.
The main pressure came from the surge in oil prices after the US and Iran launched new attacks. WTI rose 2.41% to close at US$96.02/barrel, while Brent rose 1.89% to US$97.81/barrel. The market believes the energy rally has revived inflation risks, just as the diplomatic path remains uncertain.
President Donald Trump said Wednesday that Iran has agreed not to acquire nuclear weapons, but added that "they could change their mind." The comments came after rising tensions, including reports that Kuwaiti air defense systems intercepted targets, while CENTCOM said U.S. forces thwarted Iranian missiles and drones and conducted "self-defense" strikes on Qeshm Island in response to Iranian attacks in the region.
The rise in oil also pushed U.S. bond yields higher. The 10-year yield approached 4.5% and the 30-year yield neared 5%, with the market also responding to strong ADP data and continued expansionary, albeit slightly slowing, service sector activity. In the derivatives market, CME FedWatch showed expectations of at least one 25-bps interest rate hike by year-end remained alive.
The decline was also exacerbated by a decline in AI stocks, which have been driving the recent rally. Nvidia and Dell fell more than 3%, Oracle fell more than 5%, and Microsoft fell about 3%. The combination of "oil rising, yields rising, and AI correcting" has suddenly cooled risk appetite after a long rally, with market focus now shifting to the upcoming jobs data and still-fast-moving geopolitical headlines. (arl)
Source: Newsmaker.id
