Stocks plunged and oil prices jumped to nearly $80 a barrel after President Trump said Wednesday the ceasefire with Iran is “over” and the US is preparing another night of strikes in the region after Tehran attacked vessels in the Strait of Hormuz.
The Dow Jones Industrial Average fell 1.3%, or 693 points, by about 10:40 a.m. ET, while the S&P 500 and Nasdaq slumped 0.7% and 0.5%, respectively.
Brent crude oil futures jumped 7.5% to $79.71 a barrel while West Texas Intermediate crude increased 7.2% to $75.52 a barrel.
The national average gasoline price was roughly $3.80 a gallon Wednesday, according to AAA, far below wartime highs of $4.56 – but the price has remained roughly flat over the past few days as US-Iran tensions have reheated.
There is typically a one- to two-week lag between movements in the oil markets and prices at the pump – and fresh tensions over the strait, a vital maritime route for 20% of the world’s oil, could keep gasoline from falling below the $3 mark.
Asked Wednesday at a NATO summit in Ankara, Turkey, whether the preliminary peace deal with Iran was dead, Trump replied: “To me, I think it’s over. I don’t want to deal with them anymore. They’re scum.”
“We hit them very hard last night,” he added. “We’ll probably hit them hard again tonight.”
Last month, Trump signed a memorandum of understanding giving the US and Iran 60 days to reach a final agreement on Tehran’s nuclear program, sanctions relief and the unfreezing of billions of dollars worth of Iranian assets.
The US military on Tuesday launched “powerful” overnight strikes against Iran in response to the nation’s attacks on three commercial ships near the strait, which American officials viewed as a violation of the memorandum.
Robert Edwards, chief investment officer of Edwards Asset Management, said the market moves on Wednesday were a clear sign that geopolitical tensions remain front and center – but there’s no reason to sound the alarms yet.
“This is the most noticeable escalation of Iran tensions since the ceasefire took hold almost one month ago, and the typical market playbook has commenced, with rising oil prices, rising bond yields and falling stock prices,” Edwards said in a note Wednesday.
“Any downside moves in stocks over the next few weeks are a buying opportunity, as I still see the S&P 500 reaching 7,700 by year-end, largely due to earnings strength, which has thrived throughout this period of geopolitical uncertainty.”
Energy stocks also jumped Wednesday as investors anticipated higher earnings from industry giants.
Shares in ConocoPhillips, Marathon Petroleum, Chevron and Exxon Mobil rose 2.5%, 4.3%, 2.2% and 0.9%, respectively.
Meanwhile, tech stocks – especially chipmakers – continued to fall as investors remain concerned about a potential “AI bubble” from massive spending on future technologies.
Shares in Samsung, Intel and AMD fell 6.3%, 2.6% and 0.7%, respectively.
Investors are looking ahead to the release of the Federal Reserve’s June minutes at 2 p.m. ET Wednesday for more insight into Kevin Warsh’s first meeting as chairman – especially after he took a surprisingly hawkish anti-inflation stance.
Though the majority of traders still expect policymakers to hold interest rates at their meeting later this month, the long-term outlook has flipped from rate cuts to rate hikes, according to CME FedWatch.
This story originally appeared on NYPost
