Wall Street indexes fall more than 1%, hit by tech and Iran war worries

💡 Market indexes plummeted as investors weighed the impact of a potential war with Iran on the tech sector.

The Federal Reserve delivered a hawkish surprise on Wednesday, signaling that interest rate cuts remain further away than markets had hoped. Fed Chair Jerome Powell told reporters that the central bank needs greater confidence that inflation is sustainably declining before it will consider easing policy. The 10-year Treasury yield surged to 4.8% in the aftermath, its highest level since October 2023. $TLT fell sharply as bond traders repriced the timing of the first cut from March to June.

Tech Stocks Lead Market Decline

The tech sector led the market decline, with $NVDA and $AAPL falling by 4.5% and 3.2%, respectively. The tech-heavy $QQQ ETF fell by 4.1%, reflecting the sector's significant weight in the broader market. The sell-off in tech stocks was exacerbated by concerns over a potential war with Iran, which could disrupt global supply chains and lead to increased costs for tech companies.

Iran War Worries Intensify

The escalating tensions between the US and Iran have raised concerns among investors about the potential impact on the global economy. The war of words between the two nations has led to a sharp increase in oil prices, with $USOCL rising by 3.5%. The potential disruption to global supply chains and increased costs for tech companies have also contributed to the market decline.

Interest Rates in Focus

The Federal Reserve's hawkish stance has increased the likelihood of higher interest rates in the coming months. This has led to a sharp decline in the price of bonds, with $TLT falling by 2.5%. The increase in interest rates is expected to have a negative impact on the tech sector, which is heavily reliant on borrowing to fund its operations.

What It Means for Investors