The S&P 500 went down as much as 2.5% intraday before closing 0.9% lower
Oil has surged more than 12 percent this week while threats to the Strait of Hormuz escalate and markets scramble to re‑price inflation and rate‑cut expectations.
According to BNN Bloomberg, a global sell‑off hit Wall Street on Tuesday, with the S&P 500 down as much as 2.5 percent intraday before closing 0.9 percent lower.
The Dow Jones Industrial Average dropped more than 1,200 points at its low and finished down about 0.8 percent, while the Nasdaq composite ended 1 percent lower.
CNBC reported similar moves, noting that all S&P 500 sectors closed in the red and that materials and industrials led losses as investors weighed the impact of higher energy prices and borrowing costs.
The shock is coming through oil.
BNN Bloomberg reported that Brent crude, the global benchmark, briefly jumped above US$84 before settling at US$81.40, up 4.7 percent on the day, while benchmark US crude also rose 4.7 percent to US$74.56.
CNBC said both Brent and WTI had spiked more than 9 percent during the session and had already gained 6 percent on Monday.
Reuters added that Brent is up more than 12 percent for the week around US$81.40, with prices coming off their highs only after US President Donald Trump ordered an insurance guarantee on Gulf shipping and said the navy may escort tankers through the Strait of Hormuz “if necessary.”
The security of that chokepoint sits at the centre of market anxiety.
BNN Bloomberg said roughly a fifth of the world’s oil passes through the Strait of Hormuz and reported that Iranian Brig.
Ebrahim Jabbari vowed that any ship using the passage would be set on fire.
CNBC reported that a Revolutionary Guard commander declared the strait closed and warned that Iran would set ablaze ships attempting the route.
Trump responded on his social media platform that “No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD.”
The war itself has escalated quickly.
BNN Bloomberg reported that a major attack by the United States and Israel has killed Iranian Supreme Leader Ayatollah Ali Khamenei and that Iran has struck the US Embassy in Saudi Arabia as part of a widening campaign that includes areas critical to global oil and gas production.
CNBC said the US Embassy in Riyadh was hit by drones and that Washington ordered evacuations of personnel from Bahrain, Iraq and Jordan.
Reuters reported that US and Israeli forces have pounded Iran for four days, while Iranian drones and missiles have struck Gulf oil refineries and US embassies in Saudi Arabia and Kuwait.
Bloomberg added that Israel has bombarded Tehran, Iran has fired missiles at Qatar, Bahrain and Oman, Qatar and Iraq have halted production at major energy sites, and that rising diesel and gasoline prices are lifting transportation and inflation risks.
Rates and traditional safe havens are reacting.
BNN Bloomberg reported that the 10‑year US Treasury yield briefly rose above 4.10 percent before easing to just below 4.06 percent, up from 3.97 percent on Friday, as inflation worries flared.
CNBC said yields initially leaped on the oil spike and then pared gains as crude pulled back.
BNN Bloomberg also noted that gold fell 3.5 percent to settle at US$5,123.70 per ounce after a strong run above US$5,300, while Reuters reported that gold slid about 4.5 percent overnight before steadying near US$5,128 as traders cashed out winning positions to cover losses elsewhere.
According to BNN Bloomberg, higher yields are making it more expensive for US households and businesses to borrow and are pressuring risk assets, while traders are now pushing their expectations for US Federal Reserve rate cuts further into the summer, even as Trump publicly demands cuts in angry and personal terms.
Equity damage has been global.
Nearly three out of every four S&P 500 names fell on Tuesday and that Big Tech could not prop up the market, with Nvidia down 1.3 percent.
The same outlet said South Korea’s Kospi plunged 7.2 percent—its worst day in about two years—after a holiday, Japan’s Nikkei 225 fell 3.1 percent even with more than 200 days of oil stockpiles, and France’s CAC 40 dropped 3.5 percent as European gas prices surged.
Reuters said the selling continued on Wednesday, with Seoul’s market down another 4 percent, taking two‑day losses beyond 11 percent and pushing the won to a 17‑year low, while Japan’s Nikkei slid another 2.5 percent.
European gas prices have jumped about 65 percent in two days and that the euro has slipped below US$1.16 on expectations Europe will be hit hard by higher energy costs.
CNBC added that US memory stocks followed steep declines in South Korean chipmakers, Blackstone fell 3.8 percent after reported US$1.7bn in net outflows from a private credit fund, and the CBOE Volatility Index rose to its highest level since November.
Despite the turmoil, several strategists frame this as a volatility shock, not yet a structural break.
CNN reported that David Stubbs, chief investment strategist at AlphaCore Wealth Advisory, said history shows conflicts “usually” do not materially change the direction of US corporate profits, which he called the lifeblood of equity markets.
Jason Pride of Glenmede, who said geopolitical events have a long history of driving near‑term volatility but typically do not have a sustained impact on longer‑term market growth.
Research from Carson Group, reported by CNN, found that across 40 major geopolitical and historical events over the past 85 years, the S&P 500 lost an average of 0.9 percent in the first month but gained 3.4 percent over the following six months.
Bloomberg quoted strategists at Ned Davis Research as saying that, barring a prolonged disruption to oil supplies, the conflict is unlikely on its own to end the current cyclical bull market.
Jeffrey Yale Rubin of Birinyi Associates told Bloomberg that crude has doubled several times since 1989 without automatically pushing the economy into recession.
