Wall Street dipped and crude prices jumped on Wednesday as mounting tensions in the Middle East dampened risk appetite and raised oil supply concerns.
All three major U.S. stock indexes were lower, with momentum stocks, led by Nvidia (NVDA.O), Tesla Inc (TSLA.O) and Amazon.com (AMZN.O), pulling the tech-heavy Nasdaq down most.
U.S. President Joe Biden arrived in Israel after an attack on a hospital in the Gaza Strip derailed plans for a diplomatic summit with Arab leaders as the Israel-Hamas conflict continued unabated.
Adding to the headwinds, Nvidia revealed details regarding the extent to which U.S. restrictions on chip exports to China could potentially affect its sales.
“Clearly, the Middle East situation is dominating other international news, including the ongoing fallout from the Biden administration increasing restrictions on chip sales to China,” said Jay Hatfield, portfolio manager at InfraCap in New York. “It’s hard to be super bullish with that kind of risk out there. There’s a little bit of a flight to safety going on.”
A string of quarterly profit beats, specifically from Morgan Stanley (MS.N) and Procter & Gamble (PG.N), along with a sharp rebound in U.S. housing starts, failed to stir much upside sentiment.
Elsewhere, Beijing reported China’s GDP grew at a faster-than-expected pace in the third quarter, suggesting the recovery of the world’s second-largest economy is gaining traction.
The Dow Jones Industrial Average (.DJI) fell 202.65 points, or 0.6%, to 33,795, the S&P 500 (.SPX) lost 37.13 points, or 0.85%, to 4,336.07 and the Nasdaq Composite (.IXIC) dropped 140.20 points, or 1.04%, to 13,393.55.
European shares slid as deepening fears of escalation of the Middle East conflict and a downbeat forecast for the semiconductor sector overshadowed upbeat Chinese economic data.
The pan-European STOXX 600 index (.STOXX) lost 1.13% and MSCI’s gauge of stocks across the globe (.MIWD00000PUS) shed 0.92%.
Emerging market stocks lost 0.97%. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 0.65% lower, while Japan’s Nikkei (.N225) rose 0.01%.
Oil prices advanced as mounting strife in the Middle East appeared to pose a growing threat to supply.
U.S. crude rose 1.67% to $88.11 per barrel and Brent was last at $91.22, up 1.47% on the day.
U.S. Treasury yields resumed their uphill climb as a sharp rebound in U.S. homebuilding pointed to economic resiliency.
Benchmark 10-year notes last fell 14/32 in price to yield 4.9064%, from 4.847% late on Tuesday.
The 30-year bond last fell 28/32 in price to yield 5.0129%, from 4.951% late on Tuesday.
The greenback advanced against a basket of world currencies ahead of remarks expected from several Federal Reserve officials and as market participants kept a watchful eye on developments in the Middle East.
The dollar index (.DXY) rose 0.27%, with the euro down 0.38% to $1.0535.
The Japanese yen strengthened 0.03% versus the greenback at 149.83 per dollar, while sterling was last trading at $1.2147, down 0.25% on the day.
Gold jumped to its highest level in more than a month as demand for the safe-haven metal was boosted by uncertainties surrounding the Israel-Hamas conflict.