US stocks reversed gains mid-session, closing lower as geopolitical tensions in the Strait of Hormuz intensified. The S&P 500 fell 1.8%, while the Nasdaq Composite dropped 2.3%, weighed down by tech giants including Apple (AAPL), which lost 3.1% amid broader sector weakness. The VIX index, a measure of market volatility, surged to 28.4, its highest level since November 2024, signaling heightened investor anxiety. The trigger was a series of unverified reports suggesting the deployment of naval mines near key shipping lanes in the Hormuz Strait, a chokepoint through which roughly 20% of global oil supply passes. While President Trump issued a public statement minimizing the threat, stating there was 'no active military posture' in the region, the lack of clarity from official channels fueled speculation. The absence of immediate confirmation from defense or intelligence sources deepened uncertainty, particularly in energy markets. Crude oil prices reacted swiftly, with Brent crude climbing to $98.70 per barrel, a 5.6% increase, while West Texas Intermediate (CL=F) reached $94.30. Energy firms, particularly those with offshore operations in the Middle East, saw their shares tumble. Exxon Mobil and Chevron both declined over 4%, reflecting heightened fears of supply disruption. The surge in oil prices also raised inflation concerns, pressuring the Federal Reserve’s forward guidance on interest rates. Market participants are now closely monitoring diplomatic channels and naval movements in the region. Defense contractors, including Raytheon and Lockheed Martin, saw modest gains as potential defense spending increases were speculated. However, the broader market remained under pressure, with investors favoring safe-haven assets like gold and Treasury bonds. The sell-off underscored how fragile market stability remains amid unverified geopolitical risks.
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