NEW YORK: Wall Street’s main indexes dropped on Thursday, with the blue-chip Dow hitting a more than three-month low, as escalating tensions in the Middle East lifted oil prices and Treasury yields while investors monitored a US-China summit.
Crude prices shot up USD4 a barrel, with Brent futures hitting USD107 after Yemen’s Houthis said they attacked Saudi military sites in Jazan, days after US and Iran leaders exchanged barbs at the UN General Assembly.
The developments stoked inflation concerns, with the yield on the 30-year Treasury bond reaching its highest since 2004. Bond prices move inversely to yields.
Technology stocks led declines on the S&P 500, with Nvidia, Broadcom and Microsoft slipping over 1 percent each. Analysts, however, said faith in the AI trade, which powered the Nasdaq to record highs earlier this week, helped limit losses.
“People were maybe less willing to chase stocks, but they didn’t seem particularly eager to sell them,” said Steve Sosnick, chief market analyst at Interactive Brokers.
Oracle dropped 5 percent after a report said it sent a “force majeure” notice to protect itself from potential cost increases related to a large data center project in New Mexico. Shares of alternative asset manager Blue Owl, whose unit is developing the project, also fell 5 percent.
At 11:44 a.m. ET, the Dow Jones Industrial Average fell 337.09 points, or 0.65 percent, to 51,174.50; the S&P 500 lost 35.17 points, or 0.46 percent, to 7,670.68 and the Nasdaq Composite lost 199.02 points, or 0.74 percent, to 26,737.02.
Eight of the 11 sectors on the benchmark index were trading lower, while the energy sector gained 1.5 percent. The CBOE Volatility Index, sometimes referred to as Wall Street’s fear gauge, climbed to a one-week top of 16.2 points.
President Donald Trump welcomed Chinese President Xi Jinping to the White House for a lavish state summit, with investors anticipating discussions around AI regulation, the Middle East conflict and Taiwan. The leaders are expected to meet executives from top US companies.
US Treasury Secretary Scott Bessent, meanwhile, said on Wednesday that the two superpowers have agreed to extend their truce until January 10.
Higher energy costs and recent data suggesting strong business activity and a robust labor market led investors to bet on further interest rate increases by the Federal Reserve. They now see a 71 percent chance of at least a 25-basis-point hike next month — up from around 50 percent a day ago — the CME Group’s FedWatch Tool showed.