Dow tumbles 620 points as oil surge, yields jump

U.S. stocks fell Wednesday as the Dow dropped 620.72 points to 50,687.07. The S&P 500 ended a nine-session winning streak, closing at 7,553.68, and the Nasdaq slipped to 26,853.98.

The decline followed reports of new U.S.-Iran military activity in the region. U.S. Central Command said it intercepted Iranian ballistic missiles and drones and carried out “self-defense strikes” on Qeshm Island. Kuwait reported its air defenses were intercepting hostile targets. Those developments coincided with a rise in crude prices: West Texas Intermediate futures climbed 2.41% to $96.02 a barrel and Brent rose 1.89% to $97.81.

Treasury yields moved higher alongside energy prices. The 10-year Treasury yield approached 4.5% and the 30-year yield moved close to 5%. Stronger-than-expected labor market data and continued expansion in the services sector supported the move in yields. CME FedWatch showed markets placing more than a 40% probability on a Federal Reserve rate increase by the December meeting, up from roughly 9% about a month earlier.

New York Federal Reserve President John Williams described monetary policy as “in the right place.” The Federal Reserve’s Beige Book reported economic activity had strengthened in recent weeks and noted that higher energy costs tied to the regional conflict were affecting businesses across sectors.

Large-cap technology stocks weighed on the market. Nvidia and Dell Technologies each fell more than 3%, Oracle dropped over 5%, and Microsoft declined about 3%. Several semiconductor names outperformed, including Marvell Technology, Intel, Qualcomm and Sandisk.

Alternative asset managers moved lower after Switzerland-based Partners Group announced it was capping withdrawals from an $8.6 billion private equity fund. Shares of Blackstone, KKR, Blue Owl Capital and Ares Management declined following the announcement.

GameStop rose after reporting higher quarterly revenue and unveiling a $2 billion share repurchase program.

Traders are set to monitor developments in the Middle East, upcoming economic reports and Federal Reserve commentary for signals on energy prices, inflation and interest-rate expectations.