Dow falls over 500 points as Trump-Iran tensions send oil prices higher

The Dow Jones Industrial Average fell sharply on Wednesday as renewed tensions between the United States and Iran rattled financial markets, sending oil prices higher and prompting investors to reassess geopolitical risks.

The blue-chip index dropped 577 points, or 1.1%, while the S&P 500 slipped 0.3%.

The Nasdaq Composite bucked the broader market weakness, rising 0.2% as semiconductor stocks recovered from recent losses.

Markets turned lower after US President Donald Trump declared that the ceasefire with Iran was "over" and warned that Washington could launch further military strikes.

His remarks came after the US carried out strikes against Iranian targets in response to attacks on commercial vessels in the Strait of Hormuz.

Trump comments fuel geopolitical concerns

Speaking at the NATO summit in Ankara, Turkey, Trump said he no longer believed the ceasefire would hold.

“I think it’s over. I don’t want to deal with them anymore. They’re scum,” Trump said.

The president later escalated his rhetoric, saying “we’re going to hit them hard tonight,” raising fears that the conflict could intensify further.

The United States has accused Iran of attacking three commercial ships transiting the Strait of Hormuz, prompting retaliatory military action.

NATO Secretary General Mark Rutte defended the US response, saying America's strikes were “absolutely necessary.”

“When you have a ceasefire and Iran is basically violating the ceasefire — we see what happened yesterday with ships being attacked — I think it is totally crucial that the U.S. forcefully reacts,” Rutte said.

The renewed hostilities unsettled investors who had increasingly expected tensions in the region to ease.

Oil jumps as energy stocks outperform

Oil prices surged following Trump's comments, boosting energy stocks while weighing on sectors sensitive to higher fuel costs.

Brent crude settled 5.43% higher at $78.19 per barrel, while West Texas Intermediate crude climbed 4.37% to $73.52.

Energy producers outperformed, with ConocoPhillips and Chevron each gaining about 1%, while Marathon Petroleum advanced 3%.

In contrast, consumer and travel-related stocks weakened as investors priced in the impact of higher energy costs.

Home Depot fell 2%, McDonald's declined more than 1%, and Booking Holdings lost 4%.

Airline and cruise operators also moved lower, with United Airlines, Delta Air Lines, Carnival and Norwegian Cruise Line retreating.

Chip stocks recover as Fed minutes show divided policymakers

Technology shares were mixed during the session. The VanEck Semiconductor ETF gained more than 1% after recent weakness, helped by gains in Broadcom and Nvidia.

Broadcom rose after Apple said it plans to spend more than $30 billion under a chip supply agreement reached earlier this week.

Nvidia also advanced following reports that China may allow leading AI companies to purchase a limited number of the company's H200 chips.

Meanwhile, minutes from the Federal Reserve's June policy meeting showed officials remained divided over the future path of interest rates.

The minutes stated that “many participants indicated that the appropriate level of the federal funds rate would be within or slightly below the current target range at the end of this year,” while also noting that “many other participants, however, assessed that the appropriate level of the federal funds rate would be above the current target range.”