Wall Street falls as investors weigh Iran war risks

Wall Street’s main indexes fell on Thursday as ​the Middle East conflict entered its sixth day, raising concerns of fresh inflation pressures that could complicate the Federal Reserve’s monetary ‌policy decisions.

Helping limit the losses was a strong forecast from Broadcom that projected its artificial intelligence chip revenue would exceed $100 billion next year, sending shares of the chip designer up 5.3%.

Despite the U.S.-Israeli air war against Iran showing no signs of cooling off, Wall Street’s main indexes have fared better than their European and Asian counterparts this week, ​aided primarily by a rebound in technology stocks that bore the brunt of February’s selloff.

The tech-led recovery in the prior session ​helped the Nasdaq recover all weekly losses, putting it on track to close the week in positive territory if ⁠those gains hold through Friday.

Still, a prolonged disruption in shipping through the strategic Strait of Hormuz is likely to further fuel inflation pressures through ​energy and shipping costs, at a time when U.S. tariffs have already complicated the Fed’s monetary policy outlook.

“The base case for the U.S. itself is ​that this war should be relatively short-lived which explains why, in absolute terms, equities have not fallen by very much, despite the quite sharp increases we’ve seen in spot commodity prices,” said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management.

Any signs that crude prices could hit $100 a barrel would be worrisome for markets and investors ​were on the lookout for reports that the conflict could be nearing its end.

U.S. crude prices jumped to their highest since January, which slammed ​travel stocks, with the passenger airlines sub-sector tumbling 5.7%, while Royal Caribbean Cruises and Viking Holdings lost 1.4% and 3.4%, respectively.

Policymakers have broadly acknowledged the need to wait ‌and gauge ⁠the impact on the economy, although investors are anticipating price pressures to delay a 25-basis-point interest rate cut by the Federal Reserve to October from July, according to LSEG-compiled data.

At 11:53 a.m. ET, the Dow Jones Industrial Average fell 786.98 points, or 1.61%, to 47,952.43, the S&P 500 lost 49.45 points, or 0.72%, to 6,820.05 and the Nasdaq Composite lost 92.73 points, or 0.41%, to 22,714.76.

Losses were broad, with healthcare, materials, consumer staples and industrials falling over 2% each.

On the other ​hand, energy gained 0.7%, with ⁠APA up 4%.

The CBOE volatility index was up 1.92 points at 23.18, reflecting broader investor caution, while the rate-sensitive Russell 2000 index was down 1.8%.

Declines in financials such as JPMorgan Chase and Goldman Sachs also weighed on the blue-chip ​Dow.

On the flip side, booking stocks such as Booking Holdings and Expedia shot up 10% and 7% to ​the top of ⁠the S&P 500.

A report from the Information said OpenAI was scaling back on-platform shopping checkout plans for ChatGPT, which could mark an end to disruption worries for internet marketplace businesses.

Among others, Trade Desk surged 18% after a report that OpenAI held early talks with the advertising-technology firm to sell ads.

Meanwhile, data showed the number of ⁠Americans filing ​new applications for unemployment benefits was unchanged last week.

Declining issues outnumbered advancers by a 3.34-to-1 ​ratio on the NYSE and by a 2.33-to-1 ratio on the Nasdaq.

The S&P 500 posted five new 52-week highs and two new lows, while the Nasdaq Composite recorded 27 new ​highs and 57 new lows.