Stock market today: Indexes tumble, bond yields surge amid fresh Iran attacks

A revival of US-Iran tensions is shaking markets on Wednesday after weeks of strong earnings helped investors sidestep concerns about the war.

US stocks tumbled and bond yields rose on Wednesday as investors took in renewed fighting between the US and Iran. Investors, who have been mostly looking past the conflict lately, have redirected their attention toward the inflationary impact of the war as yields inch up.

Kuwait, a US ally, said its army was “confronting hostile missile and drone attacks” in a post on X on Tuesday.

US Central Command also said in a statement that the US defeated several missile and drone attacks on Iran, and conducted “self-defense strikes” on Iran’s Qeshm Island.

Adding to the market’s confusion, President Donald Trump told the New York Times on Wednesday that Iran has agreed not to have a nuclear weapon, a key sticking point in negotiations, though he noted that the nation could later “change their mind.”

Major stock indexes slid lower by the early afternoon, with the Dow dropping more than 400 points.

Here’s where US indexes stood around 2:00 p.m ET on Wednesday:

• S&P 500: 7,570.48, down 0.52%
• Dow Jones Industrial Average: 50,899.06, down 0.80% (-408.73 points)
• Nasdaq composite: 226,870.15, down 0.83%

Oil prices ticked higher as traders digested the news. Brent crude, the international benchmark, jumped 2% to trade at around $98 a barrel, inching higher toward the key $100 a barrel mark that has come to symbolize the distress in energy markets.

Bond yields also rose, a sign that traders have swung back to worrying about inflation. The fear has been that higher oil prices can stoke higher prices across the US economy, which could raise rates and dent appetite for Treasurys.

The 10-year yield ticked up 4 basis points to around 4.49%, just a hair under the key psychological threshold of 4.5%.

The 30-year US Treasury yield traded around 4.99%, while the 20-year yield surpassed 5%.

The headwinds pushing against stocks are strengthening the longer the war goes on, José Torres, a senior economist at Interactive Brokers, wrote in a note.

“The 20% rally from the March 30 lows to yesterday’s all-time high was driven by a belief that oil prices would sink substantially against the backdrop of an expensive war that both sides were losing appetite for continuing,” Torres said on Wednesday. “From here, equities likely need to clear some of these hurdles before advancing further,” he said.

But faith in a coming peace deal began to falter earlier this week on news that Iran’s negotiators have stopped working with the US.

Trump, who has teased a peace agreement for weeks, gave markets a fresh jolt of optimism on Monday when he assured investors talks with Iran were moving at a “rapid pace” in a post on Truth Social. Investors have oscillated between feeling optimistic and skeptical about a coming resolution.

Fresh economic data in the US has also fanned some of the market’s inflationary fears. Personal consumption expenditures, the Fed’s preferred measure of inflation, accelerated to a 3.8% yearly pace in April, according to the Bureau of Labor Statistics.

Meanwhile, the private sector added 122,000 jobs in May, beating expectations and suggesting the job market may be resilient enough to tolerate higher rates as the Fed looks to tame inflation.

Economic forecasters have warned that the clock is ticking for Trump strike a deal with Iran before more serious economic consequences are felt.