Tensions in Middle East fuel Wall Street retreat: Tech stocks bear the brunt

Wall Street faced a decline on Wednesday, influenced by escalating tensions in the Middle East that subdued investors’ risk appetite. All three major U.S. stock indexes experienced losses, with the tech-heavy Nasdaq bearing the brunt due to a dip in momentum stocks such as Nvidia, Tesla, and Amazon.com.

Adding to the market’s woes, Nvidia unveiled details about how U.S. restrictions on chip exports to China might impact its sales. The disclosure further heightened concerns about the global technology supply chain.

The ongoing conflict between Israel and Hamas intensified as U.S. President Joe Biden’s plans for a diplomatic summit with Arab leaders were derailed after an attack on a hospital in the Gaza Strip. Biden’s arrival in Israel coincided with a surge in hostilities, contributing to the market unease.

“Clearly, the Middle East situation is dominating other international news, including the ongoing fallout from the Biden administration increasing restrictions on chip sales to China,” remarked Jay Hatfield, a portfolio manager at InfraCap in New York. “It’s hard to be super bullish with that kind of risk out there. There’s a little bit of a flight to safety going on.”

Despite a series of positive quarterly reports, notably from Morgan Stanley and Procter & Gamble, and a notable rebound in U.S. housing starts, the market failed to rally. The Dow Jones Industrial Average fell by 202.65 points, or 0.6%, closing at 33,795. The S&P 500 lost 37.13 points, or 0.85%, ending the day at 4,336.07. Meanwhile, the Nasdaq Composite dropped 140.20 points, or 1.04%, concluding at 13,393.55.