US-Iran Tensions Trigger Sharp Wall Street Drops and Oil Price Surge

On Wednesday evening, major Wall Street indices plunged sharply following US President Donald Trump's announcement that the interim agreement aimed at ending conflict with Iran has ended. Speaking at the NATO summit, Trump escalated tensions by stating he has no interest in continuing diplomatic engagement with Tehran and warned of imminent additional US military strikes, heightening market anxiety.

The Dow Jones Industrial Average fell 0.97%, and the S&P 500 dropped 0.46%. In response to the heightened geopolitical risk, energy markets surged, with Brent and WTI crude oil futures both rising over 5%. The spike in oil prices immediately pressured fuel-sensitive sectors, causing airline stocks such as United Airlines, Delta, and Southwest to decline between 1.1% and 3.2%. Cruise line shares, including Carnival and Norwegian Cruise Line, also fell by 1.8% to 3%.

Conversely, semiconductor stocks provided some relief, particularly Broadcom, which rose 3% after Apple announced a $30 billion chip supply deal. This helped limit losses in the tech-heavy Nasdaq, while the Philadelphia semiconductor index gained 1.4%. The recent escalation threatens to derail the stock market rally that has lifted the S&P 500 by about 10% since the start of the year, despite earlier declines linked to US-Iran tensions.

Investors are now focused on the Federal Reserve's June policy meeting minutes due later today, seeking clues on how policymakers view growth and inflation risks amid rising oil prices. The renewed oil price surge raises concerns about reigniting inflation and complicating the Fed's monetary policy path.