At a Glance

• Brent crude jumps nearly 7%
• Wall Street falls ahead of Fed decision
• AI-linked technology stocks lead losses
• Middle East tensions fuel inflation concerns

Oil prices surged on Wednesday as renewed fighting involving Iran raised concerns over global crude supplies, while U.S. stock markets fell sharply as investors weighed rising inflation risks and awaited the Federal Reserve's interest rate decision.

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Key Statements and Focus Area

• Oil rally: Brent crude climbed 6.7% to $87.55 per barrel.
• Markets decline: The Dow, S&P 500, and Nasdaq all traded lower.
• AI stocks retreat: Nvidia, AMD, Micron, and other semiconductor companies led losses.
• Fed in focus: Investors awaited the U.S. central bank's interest rate decision amid inflation concerns.

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Oil Jumps on Renewed Middle East Fighting

Brent crude rose 6.7% to $87.55 per barrel after fighting involving Iran reignited concerns about global oil supplies.

The move followed Iranian missile attacks targeting U.S. forces in the Middle East and joint U.S.-Saudi military strikes against Tehran-backed militias in Iraq.

Oil prices have been highly volatile this month, with Brent trading between $72 and $102 per barrel amid uncertainty over regional security and prospects for restoring unrestricted oil shipments.

Wall Street Slides Ahead of Fed Decision

U.S. stocks fell as investors awaited the Federal Reserve's interest rate decision.

The S&P 500 dropped 1%, the Dow Jones Industrial Average fell 878 points, or 1.7%, and the Nasdaq Composite lost 1.2%.

Rising oil prices increased concerns that inflation could accelerate again, potentially prompting the Federal Reserve to maintain tighter monetary policy.

Markets were pricing in roughly a 34% chance that the Fed would raise interest rates, which would mark its first increase in three years.

AI-Related Technology Stocks Lead Losses

Technology shares tied to artificial intelligence came under renewed pressure.

Nvidia fell 2.8%, while Advanced Micro Devices (AMD) declined 6.1% and Micron Technology lost 6.3%.

KLA Corp. dropped 10% despite reporting quarterly earnings and revenue that exceeded analysts' expectations, as investors continued reassessing high-growth semiconductor stocks.

South Korean Chipmakers Under Pressure

The sell-off extended to South Korea, where the technology-heavy Kospi index fell 6%, following a 10.8% decline the previous session.

SK Hynix dropped 9.6% after reporting record quarterly revenue and profit driven by AI demand, although its results failed to meet analysts' expectations.

Apple Limits Market Losses

Apple was among the few major technology companies to avoid heavy losses, edging up 0.1%.

Some analysts said the company has become viewed as a relatively defensive technology stock because of its more measured spending on artificial intelligence compared with competitors.

Meanwhile, U.S. Treasury yields also moved higher, with the yield on the 10-year Treasury note rising to 4.65% from 4.61%, adding further pressure on financial markets.

FYI

Investor sentiment has recently improved as oil prices retreated following a second consecutive day without direct military exchanges between the United States and Iran, easing immediate concerns over disruptions to global crude supplies.

Markets remain focused on the U.S. Federal Reserve's upcoming interest rate decision, with higher energy prices, tariffs, and persistent inflation reducing expectations for near-term rate cuts.

t the same time, investors continue to scrutinize heavy spending on artificial intelligence, questioning whether strong corporate earnings will justify the sector's elevated valuations.