U.S. stocks ended lower on Wednesday as global crude oil prices surged past the 100-dollar mark following an escalation in U.S.-Iran hostilities, intensifying inflation fears and reinforcing expectations of a Federal Reserve interest rate hike next week.
The Dow Jones Industrial Average fell by 405.41 points, or 0.77 percent, to 52,380.66. The S and P 500 sank 37.16 points, or 0.48 percent, to 7,636.36. The Nasdaq Composite Index shed 168.07 points, or 0.64 percent, to 26,253.34.
Ten of the 11 primary S and P 500 sectors ended in the red, with industrials and consumer discretionary leading the laggards by dropping 1.51 percent and 1.39 percent, respectively. Meanwhile, energy bucked the trend by rising 1.09 percent.
Brent oil prices breached triple digits for the first time in over a month after the United States struck five Iranian oil tankers, stoking fresh supply disruption fears across the Strait of Hormuz. Brent crude for November delivery gained 3.29 U.S. dollars, or 3.36 percent, to settle at 101.21 dollars a barrel on the London ICE Futures Exchange. West Texas Intermediate crude for October delivery went up 3.02 dollars, or 3.25 percent, to settle at 96.05 dollars a barrel on the New York Mercantile Exchange.
Meanwhile, U.S. government bond yields climbed sharply on Wednesday after the Treasury Department announced plans to triple the scale of its buyback operations for longer-dated sovereign debt to 6 billion dollars. Following the announcement, the yield on the benchmark 10-year Treasury note jumped to 4.859 percent at one point, marking its highest level since early November 2023. The 10-year Treasury yield had already tested the psychologically key 4.80 percent threshold during Tuesday's session, driven by surging crude oil prices that compounded broader market concerns regarding persistent inflation.
Surging energy costs added to market anxieties ahead of the Federal Reserve's policy meeting next week. According to the CME Group's FedWatch tool, traders are pricing in roughly a 60 percent probability that the central bank will raise interest rates by 25 basis points to combat lingering price pressures. Market sentiment was further dampened by simmering trade frictions as Canada's retaliatory tariffs on approximately 20 billion dollars of U.S. goods took effect.
In corporate developments, online pet supplies retailer Chewy fell over 10 percent after reporting quarterly financial results in line with Wall Street expectations, while apparel retailer American Eagle Outfitters was slated to report after the closing bell. Apple edged 0.28 percent lower as its newly appointed CEO John Ternus made his keynote debut to unveil the tech giant's latest product lineup.
U.S. stocks close lower as Brent oil tops 100 dollars
