US stocks moved lower on Wednesday as investors weighed rising geopolitical tensions in the Middle East and renewed selling pressure in technology shares.
The Dow Jones Industrial Average dropped more than 650 points, or 1.3%, while the S&P 500 declined 0.9%. The tech-heavy Nasdaq Composite fell 1.19%.
Major indexes hit session lows after President Donald Trump signaled that negotiations with Iran were moving too slowly and warned that the US could launch additional military strikes.
Trump stated that Iran had taken "too long to negotiate a deal" and would now "have to pay the price," later adding that the United States would attack Iranian targets again.
The comments marked a sharp contrast from earlier statements suggesting a peace agreement could be close.
Oil Prices Rise on New Military Threats
Energy markets reacted quickly to the escalating rhetoric. WTI crude futures rose nearly 3% and moved above $90 per barrel as traders priced in a higher geopolitical risk premium. Investors remain focused on the Strait of Hormuz, one of the world's most important oil transit routes.
Recent military exchanges between the US and Iran have raised concerns about potential disruptions to global energy supplies. Iran has continued to target US interests in the region following American strikes that were carried out after the downing of a US Army Apache helicopter.
According to market participants, a prolonged conflict could significantly tighten oil supplies and place upward pressure on inflation.
"The Iran war story is really consequential," said Argent Capital Management portfolio manager Jed Ellerbroek. Investors are increasingly debating whether diplomacy will prevail or whether energy prices will continue moving higher.
Semiconductor Stocks Extend Their Pullback
Technology shares also remained under pressure. Several major semiconductor names declined as investors continued reducing exposure to one of the market's strongest-performing sectors.
Micron Technology, Advanced Micro Devices, and Broadcom all traded lower. The recent correction follows months of powerful gains driven by enthusiasm surrounding artificial intelligence infrastructure spending.
The semiconductor sector's weakness has been particularly notable given its leadership role during the broader market rally.
Some analysts believe investors are taking profits ahead of the highly anticipated SpaceX IPO scheduled for later this week, June 12.
Others view the decline as a healthy consolidation following extraordinary gains. Despite the recent pullback, semiconductor stocks remain among the market's strongest performers this year.
Inflation Data Offers Limited Relief
Economic data provided one encouraging development for investors. US Inflation just surged to 4.2%, the highest level since 2023. Core consumer inflation rose 0.2% in May, slightly below economist expectations of 0.3%.
Source: Bull Theory via X
On an annual basis, core inflation came in at 2.9%, matching forecasts but remaining above the Federal Reserve's long-term target.
The softer monthly reading briefly helped equities recover from deeper losses earlier in the session.
However, headline inflation climbed above 4% for the first time in three years, reinforcing concerns that elevated energy prices could complicate the Federal Reserve's policy outlook.
Markets Focus on Iran Negotiations
Investors are now closely monitoring diplomatic efforts aimed at ending the conflict.
While Trump continues to threaten additional military action, negotiations remain active. Reports indicate that regional mediators are attempting to bridge remaining differences between Washington and Tehran.
The conflicting messages have created significant uncertainty across financial markets.
For now, investors appear reluctant to increase risk exposure until there is greater clarity on both the geopolitical situation and the path of inflation. With oil prices rising, chip stocks correcting, and military tensions escalating, volatility is likely to remain elevated in the near term.
