All three major U.S. stock indexes in New York closed lower across the board on the back of rising war clouds in the Middle East and a surge in international oil prices.
On the 24th (local time) at the New York Stock Exchange, the Dow Jones Industrial Average finished at 46,124.06, down 84.41 points, or 0.18%, from the prior session. The large-cap-focused Standard & Poor's (S&P) 500 fell 0.37% to 6,556.37. The tech-heavy Nasdaq composite ended down 0.84% at 21,761.89.
Investors focused on the possibility that the geopolitical crisis surrounding Iran could drag on. President Donald Trump said on social media the previous day that the United States and Iran held very positive talks to end hostilities. Trump also noted that negotiations are currently underway and that Iran, too, wants a deal.
Political outlet Axios reported that a high-level peace meeting could take place as early as the 26th. But Iran's state media drew a line, saying there had been no direct talks between the two countries, sending mixed signals. News that Israel and Iran are still engaging in armed clashes also heightened market anxiety. On top of that, as the Wall Street Journal reported that the U.S. Department of defense plans to deploy about 3,000 troops from the 82nd Airborne Division to the Middle East, expectations for peace talks quickly faded.
International oil prices, which had fallen the previous day, soared again in a single day. Brent crude futures, the global benchmark, jumped 4.55% to $104.49 a Barrel. West Texas Intermediate (WTI) futures also rose 4.79% to settle at $92.35 a Barrel.
Reports that Iran has begun charging tolls on merchant ships passing through the Strait of Hormuz, a key conduit for global oil, fueled the rise in crude prices. Trump said Iran had offered a kind of gift regarding the flow of goods through the Strait of Hormuz, but whether the strait is substantively open remains unclear.
Wall Street experts said market volatility is likely to remain high for the time being. Terry Sandven, chief strategist at U.S. Bank Asset Management, assessed that uncertainty surrounding the current situation with Iran is very high. Sandven analyzed that the stock market will move sideways, swinging up and down until the situation becomes clearer. Sandven also warned that if the S&P 500 falls below the 6,500 level, the odds of further declines will increase.
Matt Maley, a strategist at Miller Tabak, pointed out that ultimately everything depends on the reopening of the Strait of Hormuz. Maley explained that even if there is news of progress in talks this weekend, it will not be enough to reassure the market unless control of the strait is lifted. Maley added that the risks embedded in the private credit market should not be ignored, noting that large private credit corporations such as Ares Management and Apollo Global Management have blocked investor redemptions. Private credit is a method in which investment firms, rather than ordinary banks, lend directly to corporations.
There are also signs that individual investors are pulling back. Ruta Prikieneite, an analyst at market analytics firm Vanda Track, said on the 23rd that individual investors were net sellers of stocks for the first time since November 2023. The size of a single stock dumped by individuals in one day exceeded $20 million. Since early this month, individual participation in the stock market has been gradually declining.
By sector on the day, only energy finished higher, up 2% thanks to the surge in oil, and it was the sole gainer. The energy sector has risen more than 9% just this month. Investment bank Jefferies' shares climbed more than 3%, at one point soaring as much as 10% intraday. A Financial Times (FT) report that Japan's Sumitomo Mitsui Financial Group is considering acquiring Jefferies lifted the stock.
Oracle shares fell nearly 4%. The liability burden of seeking to raise large sums for artificial intelligence infrastructure investment weighed on the stock. Investor concerns also rose over Oracle's heavy reliance on OpenAI, the developer of ChatGPT.
In the cryptocurrency market, shares of Circle, the issuer of a stablecoin pegged to the dollar, plunged 19%, the worst on record. The Clarity Act, a cryptocurrency regulatory bill being pushed in U.S. politics, weighed on the stock on news it could restrict paying interest on stablecoins. Shares of Coinbase, a cryptocurrency exchange that primarily handles the coins issued by Circle, also fell 9%. Fears spread that if the revenue paid to coin holders—akin to bank deposits interest—were cut off, customers could flee en masse.