Highlights
Major stock indexes dropped Wednesday in a big risk-off move to end near the day's lows amid rising oil prices after President Trump threatened Iran with more military strikes. The Dow Jones industrial average lost 1.9 percent while the S&P 500 fell 1.6 percent and the Nasdaq was down 2.0 percent.
Bond yields, WTI crude oil prices, and the dollar all rose after President Trump warned that the US will soon strike Iran hard again as the country pays the price for not reaching a peace deal with the US. The comments have renewed worries that peace talks have faltered and warfare is set to resume.
Magnificent Seven and AI shares, which have led the market higher, had a bad day to lead the market lower as they suffered from perceptions that valuations remain too high. Among sectors, industrials were off 3.4 percent while several other sectors were down more than 2 percent, including technology, consumer discretionary and materials.
Consumer price figures came in mostly in line with expectations showing inflation rose on year to 4.2 percent in May, its highest in three years, from 3.8 percent in April. That bolstered market expectations for the Federal Reserve to raise interest rates at least once by the end of the year. Equities markets also reacted poorly to President Trump's comment that he"loves the inflation" and that he expects it to drop sharply with oil prices when the Iran war ends.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.