Dow Plunges 800+ Points as Oil Surges, Yields Rise Amid Iran Conflict
US stocks plunged on Tuesday (February 3), reversing Monday's recovery, after oil prices surged again and market participants worried the US-Iran war could last longer than expected. Risk-off sentiment dominated, as concerns grew about the conflict's impact on inflation and economic growth.
The Dow Jones Industrial Average fell 828 points, or nearly 1.7%, and briefly fell to -1,277.93 points at its session low. The S&P 500 fell 1.6%, while the Nasdaq Composite fell 1.7%. At its lows that day, the S&P 500 had fallen 2.5%, and the Nasdaq Composite was down around 2.7%.
All sectors in the S&P 500 closed in the red on Tuesday. The energy sector was a relative exception, while the majority of other sectors fell more than 1%. Materials, industrials, and consumer discretionary stocks recorded the largest declines, as the market assessed that rising oil prices and borrowing costs (yields) could potentially pressure the US economy through resurgent inflation and slowing consumption.
Several major technology stocks, which had previously led the intraday rebound on Monday—including Nvidia—weakened again. US memory stocks were also under pressure and could follow the significant decline in South Korean memory chip stocks. On the corporate side, Blackstone shares fell 7% after the Financial Times reported that its private credit fund recorded a net outflow of $1.7 billion in the first quarter.
"Shelter in place" was also limited as gold fell sharply after briefly strengthening on Monday. Meanwhile, the CBOE Volatility Index (VIX)—Wall Street's "fear" indicator—surged to its highest level since November, underscoring growing market stress.
In energy markets, Brent surged nearly 8% on Tuesday to break above $84 per barrel, after rising about 6% on Monday. WTI also surged nearly 8% to above $77 per barrel, extending its 6% gain in the previous session. The surge in energy prices has also pushed Treasury yields higher, as markets worry that rising oil prices will revive inflation—just when US investors are hoping the Fed's interest rate cuts will support the economy.
Source: Newsmaker.id
