“We’re going to hit them hard tonight.” President Donald Trump said that on Wednesday, threatening another attack on Iran, and oil jumped. Stocks that had been calm earlier in the week slid, and the Dow Jones Industrial Average ended the day down 1 percent, its worst session since June 10.
The S&P 500 closed 0.3 percent lower. The Nasdaq 100 rose 0.3 percent. The Russell 2000 index of small-cap stocks dropped 1 percent for a second straight session.
Oil leaps on the Hormuz attacks
The trigger was a flare-up in the Strait of Hormuz. Trump said the ceasefire with Iran may be over after fresh attacks on shipping. On Tuesday the United States launched a series of retaliatory airstrikes on military infrastructure in southern Iran, after Iran bombed three commercial vessels in the strait. After the market closed Wednesday, Trump wrote on Truth Social that “it will get much worse” if Iran keeps bombing ships.
Brent crude futures settled up 5.43 percent at $78.19 a barrel. West Texas Intermediate rose 4.37 percent to close at $73.52.
Higher oil prices revived worries about inflation among investors, and bets on a rate hike grew. Fawad Razaqzada of Forex.com told Bloomberg that markets “weren’t initially taking the re-escalation in US-Iran tensions too seriously earlier this week.” Then, he said, “today, that seems to have changed.”
Chip stocks go the other way
Funds tracking the major indexes moved in line with them. The SPDR S&P 500 ETF fell 0.5 percent, and the SPDR Dow Jones Industrial Average ETF Trust lost 1.2 percent. Invesco’s QQQ Trust finished about 0.1 percent higher.
Chipmakers were the bright spot. The VanEck Semiconductor ETF added 1.5 percent, helped by gains in Broadcom and Micron Technology, and the Philadelphia Semiconductor Index gained nearly 2.2 percent.
Retail sentiment on Stocktwits for the three big index funds sat between “bullish” and “extremely bullish,” with message volumes from normal to high.
