BANGKOK — Oil prices moved higher and global stock markets retreated Wednesday after President Donald Trump cast fresh uncertainty over a temporary pause in the conflict with Iran.
The S&P 500 slid 1% after Trump described the agreement to halt fighting as “over,” even as he said he would still permit negotiations to continue. By 11:45 a.m. Eastern time, the Dow Jones Industrial Average had dropped 831 points, or 1.6%, while the Nasdaq composite was also down 1%.
The reaction was even sharper in energy markets. Brent crude, the international benchmark, jumped 8% to $80.09 a barrel. While that remains far below the nearly $120 level reached by the most actively traded contract earlier in the war, the sudden rise rattled investors because oil had only recently returned to prewar levels.
At the center of the concern is the Strait of Hormuz, a critical route for moving crude from the Persian Gulf to buyers around the world. Any disruption there could push energy costs higher, complicating expectations that inflation would ease as oil prices settled down. That, in turn, could pressure the Federal Reserve and other central banks to keep interest rates elevated or raise them further.
Higher interest rates can help restrain inflation, but they also tend to weigh on economic growth and put pressure on a wide range of investments.
European stock market losses deepened and oil prices rose quickly after Trump said of the ceasefire, “For me, I think it’s over.” He added that U.S. representatives could keep negotiating, “but I think they’re wasting their time.”
Trump later said the United States was preparing for another night of strikes against Iran.
On Wall Street, airlines and other companies exposed to rising fuel costs took some of the heaviest hits. American Airlines dropped 5.9%, while United Airlines fell 4.9%.
Stocks of companies in the housing industry were also weak. They were hurt by worries that rising Treasury yields in the bond market will lead to higher rates for mortgages and chill the industry.
Builders FirstSource, which sells countertops, windows and other building supplies, fell 6.6%. Homebuilders PulteGroup fell 4.6%, and D.R. Horton sank 4.5%.
Drops of 4% for Sherwin-Williams and 3.3% for Home Depot were two of the biggest reasons the Dow was heading toward its worst loss in about a month.
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Helping to offset those losses was a steadying for some influential stocks in the artificial-intelligence industry. They’ve been under pressure in recent weeks on worries that their prices shot too high and that AI may not produce enough productivity and profits to make all the investments in chips and data centers worth it.
Their swings carry a lot of weight on Wall Street because AI stocks have grown into some of the U.S. market’s biggest, giving their movements more effect on the S&P 500 than other stocks.
Nvidia rose a modest 0.3%, for example, and was the second-strongest force pushing upward on the S&P 500 because it’s the largest stock on Wall Street.
The strongest push upward on the market came from Broadcom, which rose 4.1%. Apple announced a multiyear commitment with Broadcom to design and produce custom components for its products. Apple said the agreement’s value could top $30 billion.
In the bond market, Treasury yields rose with the price of oil. The yield on the 10-year Treasury climbed to 4.59% from 4.55% late Tuesday and from just 3.97% before the war with Iran began.
In stock markets abroad, losses for European markets worsened after Trump made his comments, and Germany’s DAX lost 2.2%.
In Asia, South Korea’s Kospi dropped 5.3% and continued its sharp swings amid dueling worries and euphoria about the AI stocks that dominate its market.
Hong Kong’s Hang Seng index was an outlier and rose 3%.
Shares that trade in Hong Kong of Chinese AI startup Zhipu, known also as Z.ai and traded as Knowledge Atlas Technology, jumped 13.4%.
A six-month lock-up period for “cornerstone” investors following its January trading debut in Hong Kong expires this week. China National Radio reported late Tuesday that nearly 70% of Zhipu’s cornerstone investors are committed to stay on, despite previous worries that the lock-up period expiration could trigger a sell-off.
Zhipu’s share price has risen more than 1,300% since its debut.
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