Markets jumped to new highs early this morning as investors felt hopeful about diplomatic progress. But by midday, those gains disappeared. It became clear that risk assets had risen too quickly, and overall sentiment turned negative.
Tensions in the Gulf quickly returned, pulling markets back down. Optimism faded after reports that Iran had fired missiles at US Navy destroyers, apparently in response to US strikes on Iranian tankers. Iranian state TV also reported anti-aircraft activity and explosions over Tehran, adding more uncertainty to the trading floor.
Confusion about the blockade added to the day’s volatility. A US official told Al Jazeera that reports about the US military preparing to restart “Operation Freedom,” the mission to reopen the Strait of Hormuz by force, were completely false. These conflicting stories made WTI crude oil prices swing wildly, eventually pulling them back down toward $95.
Stocks could not hold up after the reversal. Both the S&P 500 and Nasdaq reached impressive new intraday highs at 7,385 and 28,850 but lost momentum and ended the day lower.
The Dow Jones also dropped more than 300 points, falling below the 50,000 mark by the close.
With the peace rally over and geopolitical tensions rising again, tomorrow’s important Non-Farm Payrolls (NFP) report could be a major turning point for Wall Street as investors look for direction.