New York stocks closed lower across the board on heightened geopolitical tensions over Iran and uncertainty in the private credit market. As President Donald Trump hinted at possible military action against Iran, international oil prices surged, and news that a major asset manager halted fund redemptions sharply chilled risk appetite, led by financials.
On the 19th (local time) at the New York Stock Exchange, the Dow Jones Industrial Average fell 267.50 points, or 0.54%, to close at 49,395.16. The large-cap-focused Standard & Poor's (S&P) 500 index slipped 0.28% to 6,861.89. The tech-heavy Nasdaq also dropped 0.31% to end at 22,682.73.
President Trump mentioned Iran's nuclear program and said a decision on whether to launch military strikes would be made within 10 days. He identified Iran as the most dangerous region at present while increasing pressure by saying "we need to reach a meaningful deal." As tensions in the Middle East rose, West Texas Intermediate (WTI) jumped 2.4% to $66.73 per Barrel, the highest since last August. Gold, a representative safe-haven asset, also rose 0.4% to $4,999.94 per ounce, nearing the $5,000 threshold.
Concerns over private credit stress, which had been brewing beneath the surface of financial markets, also materialized. On the day, alternative investment asset manager Blue Owl Capital halted redemptions for a private credit fund aimed at individual investors and decided to restrict withdrawals. Private credit is a market in which nonbank financial firms lend directly to corporations; it has grown rapidly in recent years but has been criticized for its opaque structures. On the news, Blue Owl shares plunged about 6%, while peers including Blackstone and Apollo Global Management fell more than 5%.
By stock, retail giant Walmart delivered a disappointing report card. Although Walmart's fourth-quarter results beat market expectations, it issued a conservative outlook for future revenue, sending the stock down more than 1%. In contrast, Amazon recorded annual sales of $716.9 billion, overtaking Walmart to become the world's largest sales corporations.
Experts said market volatility is likely to persist for the time being. Tom Lee of Fundstrat said "the possibility of military action in the Middle East is stoking short-term risk-off sentiment." Antonio Rodriguez, chief investment officer at Procyon, said "the recent market moves are a process of confirming a leadership change" and added "a rebound will require earnings momentum from laggards in the indexes."
The virtual asset market edged higher despite the stock market's decline. Bitcoin rose 1.2% from the previous day to $67,113.68. The yield on the 10-year U.S. Government Bonds slipped 0.01 percentage point to 4.07% on safe-haven demand stemming from geopolitical risk.