The Nasdaq Composite fell 1.3% in midday trading Wednesday as renewed Middle East tension pushed oil prices up more than 6% and semiconductor stocks took the heaviest losses. The Dow Jones Industrial Average dropped 1.7% and the S&P 500 shed 1%, with traders also positioning ahead of the Federal Reserve's afternoon policy decision.
The Nasdaq Composite is down 1.3% at mid-day Wednesday, caught in a U.S. selloff driven by geopolitical tension and a retreat from chip stocks. The Dow Jones Industrial Average is down 1.7%, while the S&P 500 has shed 1%. Leading the Dow lower were Caterpillar dropping 7.3% and Goldman Sachs falling 4.6% on macroeconomic concerns.
Oil jumps and the Fed decision looms
All three indexes opened in the red, attempted to stabilize around 11 a.m. ET, then slid lower again. The immediate trigger for the selling was oil prices rocketing more than 6%. President Donald Trump told Fox News the U.S. would give Iran "a beating" following an overnight missile attack on American forces, ending last Friday's diplomatic progress.
Because every company depends on energy in some way, high oil prices quickly get expensive for retailers, tech giants and manufacturers. Then there is the Fed: Chairman Kevin Warsh will announce the latest policy decision at 2:00 p.m. Futures markets are pricing in a nearly 70% chance that rates stay in the current 3.5% to 3.75% range. Traders will parse Warsh's press conference for hints on whether the Fed is sticking with higher-for-longer or whether recent oil price swings and stubborn inflation readings are raising fresh concerns.
Semiconductors bear the brunt
Semiconductor stocks took the heaviest losses in the technology sector sell-off. The iShares Semiconductor ETF plunged 4.4%, extending a 10% weekly decline. Micron Technology dropped 5.7%, while Advanced Micro Devices fell 5.8%.
Neither name did anything wrong, other than being a richly valued growth stock on a de-risking kind of market day.
Earnings add to the drag
Sherwin-Williams beat analyst estimates and Boeing posted a mixed report, yet both stocks fell, erasing a combined 109 points from the Dow. After the closing bell, Microsoft and Meta report earnings in a financial test of AI infrastructure spending. Another two Magnificent 7 companies report tomorrow.
Source: The Motley Fool
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