Nasdaq confirms correction, Wall Street slumps on Middle East uncertainty
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Traders working on the floor of the New York Stock Exchange.
PHOTO: AFP
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- Nasdaq fell 2.38%, confirming a correction. S&P 500 and Dow also declined due to escalating US-Israeli-Iran war fears and rising oil prices.
- Uncertainty around the Iran war and mixed signals from Trump, pausing attacks for 10 days pending talks with Tehran, drove market volatility.
- Meta and Alphabet shares dropped after verdicts finding them liable for harming children, contributing to the communications sector's 3.5% decline.
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NEW YORK – The Nasdaq tumbled more than 2 per cent to confirm a correction on March 26 while the S&P 500 and the Dow fell more than 1 per cent.
Investors scrambled for safety on fears of escalation in the US-Israeli war against Iran, which has sent oil prices soaring and exacerbated inflation concerns.
March 26 marked the biggest one-day decline for the Nasdaq and the S&P 500 since Jan 20.
US President Donald Trump said Iran must make a deal with the US or face a continued onslaught, while warning that taking control of Iran’s oil was an option.
A senior Iranian official told Reuters the US proposal for ending nearly four weeks of fighting is “one-sided and unfair”, while stressing that diplomacy had not ended.
Stock futures pared losses slightly after the market closed when Mr Trump said he was pausing attacks on Iran’s energy plants for 10 days until April 6 at the Iranian government’s request. He said talks with Tehran were going “very well”.
Earlier, the lack of any clear signs of progress sent oil prices soaring, with US crude futures settling up 4.6 per cent compared with a 5.7 per cent advance for Brent futures.
As a result, stock indexes erased gains from March 25 when investors had been betting on a de-escalation in the war, which has disrupted oil shipments through the Strait of Hormuz.
‘Fog of war’
“The back and forth seems to be happening at a quicker pace. On top of it, we don’t know who Trump is negotiating with,” said Mr Doug Beath, global equity strategist at Wells Fargo Investment Institute, adding that uncertainty about the war was causing investors to sell equities.
“There’s a lot of conflicting signals, and it’s really the fog of war, the uncertainty of all of it that’s driving this.”
The Dow Jones Industrial Average fell 469.38 points, or 1.01 per cent, to 45,960.11, the S&P 500 lost 114.74 points, or 1.74 per cent, to 6,477.16 and the Nasdaq Composite shed 521.74 points, or 2.38 per cent, to 21,408.08.
The technology-heavy Nasdaq closed down 10.7 per cent from its Oct 29 closing record high, confirming it has been in a correction since that date. A correction is a decline of 10 per cent or more from a recent market high.
Noting that stock markets have generally been weaker on Fridays since the Iran war began a month ago, Mr Peter Tuz, president of Chase Investment Counsel, said the S&P 500 could follow the Nasdaq in confirming a correction.
“After three good years for markets, a sell-off of 10 per cent to 20 per cent should not surprise anyone. We had one last year during the tariff proposals. Bad technical indicators might, however, encourage selling and discourage buying until the situation clears up,” Mr Tuz said.
Most of the S&P 500‘s 11 major industry sectors lost ground. Energy was the biggest gainer, adding 1.6 per cent. The only other sector to show a percentage gain was defensive utilities, which added 0.2 per cent.
The biggest sector laggards were communications services, down 3.5 per cent, and technology, which lost 2.7 per cent.
Meta, Alphabet drop after verdicts
The communications index was under pressure after jurors found Meta and Alphabet’s Google liable in the first two trials from a growing wave of lawsuits accusing social media firms of harming children. Meta shares finished close to 8 per cent lower, while Alphabet lost more than 3 per cent.
In technology, chip stocks were a big drag with the Philadelphia Semiconductor Index tumbling 4.8 per cent after three sessions of gains.
Leading declines in the Dow were shares of artificial intelligence chip leader Nvidia, which finished down more than 4 per cent. Earlier on March 26, the OECD warned that the Middle East conflict has knocked the global economy off a stronger growth path, with the near-closure of the Strait of Hormuz threatening to push inflation sharply higher.
With high oil prices fanning inflation fears, central banks are in a tough spot regarding interest rates, with traders no longer pricing in any easing from the US Federal Reserve in 2026. Two rate cuts had been expected before the Iran conflict erupted, according to the CME Group’s FedWatch Tool.
Earlier, data showed new applications for US unemployment benefits rose slightly last week, suggesting a stable labour market and giving the Fed scope to hold rates steady while monitoring the impact of the Iran war.
US-listed shares of gold miners, including Sibanye Stillwater and Harmony Gold, fell more than 4 per cent as bullion prices lost more than 2 per cent.
Declining issues outnumbered advancers by a 3.16-to-1 ratio on the NYSE, where there were 121 new highs and 202 new lows.
On the Nasdaq, 1,385 stocks rose and 3,423 fell as declining issues outnumbered advancers by a 2.47-to-1 ratio. The S&P 500 posted 20 new 52-week highs and eight new lows.
Volume was light, with 16.50 billion shares changing hands on US exchanges compared with the 20.54 billion average for the last 20 sessions. REUTERS
