Strong pressure was placed on the Wall Street at Wednesday's meeting, as Donald Trump escalated his rhetoric towards Iran, stating that the US would «hit hard» the country for a second consecutive day. At the same time the escalation of geopolitical tensions in the Middle East pushed oil prices higher and caused a new wave of sales in bonds.
On the dashboard, the Dow Jones took a dive of 953 units or 1.87% losing the limit of 50,000 units, at 49,918. THE S&P 500 In the last five weeks, the Commission decided to grant aid to the steel industry. Nasdaq received a strong surge of liquidations resulting in landing at 25,169 units reduced by 1.98%.
On the bond market, yields tended upward due to an increase in oil prices and concerns about further inflationary pressures. The performance of 10 years was enhanced to 4.54% and 30 years reached 5.02%.
Oil prices increased over 2% with Brent ejecting at $93.10, following the new statements by United States President Donald Trump, who pledged to strike Iran again and accused Tehran of delaying talks on a temporary peace agreement, following the American blows of the previous night that further burdened the fragile two-month truce.
«We will attack them and attack them very hard», Trump told reporters at the White House. «We hit them hard yesterday and we'll hit them hard again today.».
Trump even did not block new hits on Iranian energy and transport infrastructure, when asked about a Fox News report that said attacks on power stations and bridges were being considered. «I'm not going to tell you this, but I can do this.», answer features.
Increased tension in the Middle East threatens to derail indirect negotiations between US and Iran, clouding the prospects for an agreement that would allow the reopening of the Straits of Hormuz. This development strengthens concerns about new inflationary pressures that may force Federal Reserve to re-increase interest rates before the end of the year.
«Investors had bet on a quick Middle East peace deal», explained Brett Kenwell of eToro. «The problem is that the delay in resolving the crisis, the greater the chance that oil prices will remain high. And the longer energy remains expensive, the more persistent inflation becomes».
These concerns overshadowed the US inflation figures, which had earlier offered some relief to the markets. Although inflation has accelerated in May to the fastest rate of over three years, it has moved within forecasts, while the structural index has increased less than analysts expected.
Energy was the main lever of the valuations, with prices rising by 23.5% on an annual basis, while petrol recorded a 40.5% rise, at the highest levels since the summer of 2022.
Despite inflationary pressures, the figures led the markets to slightly reduce the chances of interest increases by Fed in the coming months and marginally enhance scenarios for future interest rate reductions, according to CME FedWatch data. In fact, especially for next week's meeting, it is now almost certain that the council will hold a stand again.
At the same time, warnings of excessive valuations increase to market segments associated with artificial intelligence, where the shares of so-called «Magnetic Seven» and many semiconductor companies have recorded impressive returns in recent years.
Investors are also preparing, for an unprecedented wave of new stock issuesAs more and more companies are looking for funds to fund their plans in artificial intelligence.
This forces investors to proceed with portfolio restructuring to «fit» new imports, such as SpaceX, while the increased supply of new securities sustains the questions of whether investment demand will suffice to absorb publications without affecting market valuations.
It should be noted that SpaceX’s public registration has attracted more than four times the number of shares available, according to reports.
«After the historic rally, the market needed a breath and securing profits was necessary to manage the risk», noted Mark Hackett of Nationwide. «Starting with Google's stock offer last week, SpaceX's IPO this week and potential public offerings from Meta, OpenAI and Anthropic, institutional and private investors pool liquidity to participate».
On the dashboard, semiconductor companies were found for a second consecutive day at the heart of the liquidations.
The Philadelphia Semiconductor index declined by nearly 3%, with Qualcomm, Arm, Micron Technology and Broadcom among Nasdaq's biggest losers.
Major losses, over 26%, also recorded Super Micro Computer, following the announcement of a $7 billion raise plan through stock issues to finance new investments in artificial intelligence servers.
At the same time, the shares of transport companies and logistics, such as Knight-Swift Transportation, J.B. Hunt and FedEx Freigh, were pressed after Amazon announced an extension of the smaller volume cargo service to all companies.
Despite the general sell off some shares with strong corporate news they managed to move up. Cracker Barrel Old Country Store's share was very high at around 25%, as it announced quarter results that far exceeded analyst estimates.
In a new historical high, Coca Cola Company's share rose by more than 2%, due to the steady growth of profits and revenue, as well as the positive verdict of international houses and banks on its prospects, with Morgan Stanley last today.
The large energy groups, such as Chevron, Exxon Mobil, Devon Energy and ConocoPhillips, have also shown strong dynamics in view of the benefits of extending the energy crisis and the new rise in black gold prices.
