Wall Street slides on Mideast de-escalation uncertainty

Wall Street’s main indexes dropped on Thursday following gains in the previous session, as investors remained cautious about developments in the Middle East while weighing the prospects for de-escalation in the conflict.

U.S. President ​Donald Trump said Iran was desperate to make a deal to end the fighting and urged Tehran to “get serious” about a deal. Iran’s Tasnim News Agency said Tehran had officially responded to the United States’ 15-point proposal, citing sources with knowledge. Iran had denied any negotiations with the U.S. in public.

Contradictory signals from both sides left markets on edge, as hopes for a breakthrough to restore shipping through the crucial Strait of Hormuz remained uncertain.

“Hearing a lot of different things come out, you have the market trying to figure out exactly what’s going on. We’re watching oil prices … We’re still a little bit cautious there because some of the downside scenarios aren’t good for the global economy,” said Jack Herr, primary investment analyst at GuideStone.

“But overall if we can get a quick resolution of this thing, the backdrop for another good year in the market is there with some of the fundamentals and growth numbers we’re seeing.”

At 9:40 a.m. ET, the Dow Jones Industrial Average fell 250.43 points, or 0.54%, to 46,179.06, the S&P 500 lost 56.82 points, or 0.86%, to 6,535.08 and the Nasdaq Composite lost 262.81 points, or 1.20%, to 21,667.02.

Technology stocks were the main laggards and the S&P 500 tech index fell 1.3%. Memory chipmakers continued to selloff, with Micron Technology, SanDisk and Western Digital down between 3.3% and 4.8%.

Meta Platforms and Alphabet dropped 3.2% and 2%, respectively, weighing on the communication services index. The Philadelphia SE Semiconductor index lost almost 2%.

The escalating conflict in the Middle East has knocked the global economy off a stronger growth path, the OECD warned on Thursday, with a closure of the Strait of Hormuz threatening to push inflation sharply higher.

Central banks have been put in a tough spot with regard to interest rates, as money market participants no longer price in any easing from the U.S. Federal Reserve this year. Two rate cuts had been expected before the Iran conflict erupted, according to the CME Group’s FedWatch Tool.

Data showed new applications for U.S. unemployment benefits rose slightly last week, suggesting a stable labor market and allowing the Fed to hold rates steady while monitoring the impact of the Iran war.

Comments from Fed officials Lisa Cook, Stephen Miran, Michael Barr and Philip Jefferson are on deck through the day.

Among individual movers, shares of Olaplex jumped 50% after Germany’s Henkel agreed to buy the hair-care brand in a $1.4 billion deal.

U.S.-listed shares of gold miners slipped as bullion prices declined more than 1%. Sibanye Stillwater lost 2.2% and Harmony Gold shed 1.1%.

Declining issues outnumbered advancers by a 2.78-to-1 ratio on the NYSE and by a 2.38-to-1 ratio on the Nasdaq.

The S&P 500 posted nine new 52-week highs and two new lows, while the Nasdaq Composite recorded 14 new highs and 75 new lows.