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S&P 500 drops after Trump declares Iran deal is over

Broadcom, a chip stock that has been battered recently, led the gains amongst recent battered stocks. The S&P?500 dropped on Wednesday as U.S. president Donald Trump declared an interim agreement aimed at ending?the war?with Iran to be "over." Trump, speaking at the NATO summit in?Turkey said that he was not interested in continuing talks with Iran. He also warned that Washington will likely conduct additional strikes on Wednesday evening. Trump's remarks marked the latest setback of the series of back and forth talks which have oscillated between threats of escalation, and hopes for diplomacy. Investors were left unprepared by several false begins toward a peace agreement. The key is duration. How long will this last? Rob Haworth is a senior investment strategist at U.S. Bank Wealth Management, Seattle. The market could react more strongly if we see damage done to Iranian infrastructure because of the likely retaliation from Iran. Microsoft, Amazon, and Alphabet, all AI giants, each lost more than 1%. This weighed on the S&P500. Broadcom rose 5.2% when Apple announced it would spend over $30 billion as part of an agreement with Broadcom reached this week.

Art Hogan is the chief market strategist for B. Riley Wealth. He said: "Any announcement by Apple regarding their use of your equipment is a positive thing, especially with 2.5 billion Apple devices around the world." Nvidia rose by?about 2.8% following the Information's report that China plans to allow its top AI companies to purchase a limited amount of the company’s H200 chip. The PHLX Chip Index rose 2.2% and is now up 77% by 2026. The S&P was down 0.36% to 7,477.10. The Nasdaq fell 0.08%, to 25,798.29, while the Dow Jones Industrial Average dropped 1.11%, at 52,335.24. Nine out of 11 S&P 500 indexes fell, with industrials down by 3.41% and materials dropping by 2.45%. Brent crude futures rose 5% after Trump's comments. Treasury yields rose too as the selling spread to bonds. The latest escalation of the conflict threatens to undermine the rally in equities that has seen the benchmark S&P500 up by about 9% this year despite sharp drops after the Mideast War started.

Oil prices may rise again, causing inflation concerns to resurface and complicating the path of the Federal Reserve. Travel stocks that are sensitive to energy prices fell as rising oil prices raised concerns about fuel costs and demand. United Airlines fell 2.3%, and Delta Air Lines dropped 1.9%. Cruise operators were also affected, with Carnival dropping 3.7% and Norwegian Cruise Line falling 2.1%. The International Monetary Fund lowered their '2026 global growth prediction to 3% on Wednesday, warning about the ongoing risks of the Middle East war. Minutes of the meeting showed that inflation concerns increased at the U.S. Central Bank's last month's meeting as officials 'followed Federal Reserve chairman Kevin Warsh's example to a more stripped-down statement', according to the 'Wednesday' minutes. According to CME's Fedwatch, traders expect a rate hike at the Fed's meeting in December. The S&P 500 saw a ratio of 3.3 to 1 between declining stocks and rising stocks.

(source: Reuters)