Wall Street Falls Sharply, Trump's Threats to Iran Weigh on Risk Sentiment
US stocks weakened on Wednesday (June 10th) after President Donald Trump signaled that negotiations with Iran were taking too long and threatened further military action. This statement put the market back on the defensive as investors assessed that geopolitical risks in the Middle East were far from abating.
The Dow Jones Industrial Average fell 953.33 points, or 1.87%, to 49,918.78. The S&P 500 fell 1.62% to 7,266.99, while the Nasdaq Composite fell 1.98% to 25,169.50. The greatest pressure again came from technology and semiconductor stocks.
Market sentiment worsened after Trump said the US would hit Iran "very hard" and accused Tehran of taking too long to negotiate a deal. The threat came after the US launched an attack on Iran in response to the downing of a US Apache helicopter near the Strait of Hormuz. These tensions caused investors to reduce their exposure to risky assets.
Oil prices also rose as the market reassessed the risk of energy supply disruptions. WTI closed up 2.07% to US$90.03/barrel, while Brent rose 1.8% to US$93.10/barrel. Rising oil prices are important for the stock market because they can keep inflation high and limit central banks' room for policy easing.
Chip stocks were again the main drag. Micron Technology, Advanced Micro Devices, and Broadcom weakened, while the iShares Semiconductor ETF (SOXX) fell more than 3%. This pressure continued the semiconductor sector's correction after a major rally driven by the AI narrative. Despite the weakening, SOXX is still up around 80% year-to-date, so profit-taking remains a key factor.
Some market participants also believe the weakening of chip stocks is related to preparations for the SpaceX IPO on Friday. There is a view that investors, including retail investors, are beginning to unwind some positions in highly valued chip stocks to make room for the major IPO. However, the main factors remain a combination of high valuations, geopolitical risk-off, and rotation after the sharp rally.
US inflation data actually provided some relief. Core CPI in May rose 0.2% month-on-month, lower than the 0.3% forecast, while the annual rate stood at 2.9%, in line with expectations. However, annual headline inflation rose above 4% for the first time in three years, keeping the market wary of the impact of energy prices and the risk of prolonged high interest rates.
Big picture: Wall Street is facing dual pressures: geopolitical risks driving oil prices higher and a continued correction in technology stocks, which previously fueled the market rally. As long as the US-Iran conflict persists and energy prices remain high, volatility in major indices is likely to persist. (Arl)*
Source: Newsmaker.id
