The shadow of war has blanketed Wall Street. As the possibility of a military conflict between the U.S. and Iran grows, international oil prices have surpassed $100 per barrel, and U.S. Treasury yields have spiked, causing the New York stock market to close lower across the board.

While some artificial intelligence (AI)-related tech stocks rebounded to limit the downside, market sentiment was heavily weighed down by concerns that rising energy prices could simultaneously stimulate inflation and interest rates. Geopolitical risks in the Middle East are shaking both financial markets and the real economy at the same time.

On the 23rd local time at the New York Stock Exchange, the Dow Jones Industrial Average finished down 652.82 points (1.23%) at 52,215.16. The S&P 500 fell 0.52% to 7,623.68, and the Nasdaq Composite dropped 0.21% to 25,955.34.

Although the tech-heavy Nasdaq experienced a relatively smaller decline, buying pressure was not strong enough to support the market. This is interpreted as a result of investors adopting a cautious stance, closely monitoring war risks and inflation trends rather than hunting for bargains in growth stocks.

The core factor pressuring the market was the surge in international oil prices. On the ICE Futures Europe exchange, Brent crude for December delivery closed up 3.14% at $116.72 per barrel. West Texas Intermediate (WTI) in the U.S. also rose 3.82% to $103.27. Amid talks of a possible resumption of attacks on Iran by the U.S. and Israel—alongside Iran's warnings of a strong response—anxieties spread that Middle Eastern crude supply chains could be disrupted.

The Middle East is a critical region in global crude oil production and transportation. If military conflicts escalate or traffic through major maritime shipping lanes, including the Strait of Hormuz, faces disruptions, crude supply and transportation costs could rise simultaneously.

What concerns the market is not just the intensity of the fighting, but how long the tension will last. If supply instability persists, rising international oil prices would sequentially reflect in gasoline, aviation fuel, logistics costs, and manufacturing expenses, increasing the burden on corporations and households.

Inflation anxiety also impacted interest rates. The U.S. 10-year Treasury yield approached the 5% per annum mark. This is interpreted as the bond market reflecting expectations that increased inflationary pressures from rising oil prices could make the U.S. Federal Reserve more cautious about cutting interest rates.

When Treasury yields rise, corporate funding costs increase, and financial burdens on households, such as mortgages, also grow. Technology companies, which command high valuations based on expectations of future earnings, can hardly avoid downward pressure on their stock prices due to rising discount rates.

By sector, energy stocks showed strength, while finance and industrial stocks showed weakness. American Express saw its shares drop over 3% after announcing a plan to cut about 5% of its global workforce. Caterpillar, a bellwether industrial stock, also fell 2.4%. These movements highlighted an uneasy market atmosphere, aligning corporate cost-cutting measures with the weakness in cyclical sectors.

On the other hand, Micron Technology, which plummeted the previous day, rose 2.5%, and AMD gained 1.7%. Bargain hunting appeared to flow into AI semiconductor-related stocks. However, evaluations suggest it is still premature to interpret the rebound of a few stocks as a recovery signal for the tech sector overall. This is because questions remain over how quickly the capital poured into large-scale data center construction and chip purchases will translate into actual profits.

Even if growth expectations for the AI industry are high, if investment scale fails to lead to increased sales and earnings, stock price volatility could increase.

This decline demonstrates that the stock market is simultaneously exposed to three variables: geopolitical risk, inflation, and interest rates. In particular, the surge in international oil prices can act as a boon for the earnings of energy producers, but it poses a cost burden for manufacturing and transportation sectors with high energy consumption.

Consumers may also reduce spending due to rising fuel costs and living expenses, which could intensify downward pressures on the economy. If the high-interest-rate regime aimed at taming inflation is prolonged, even the recovery of corporate investment and consumer spending could be delayed.

The market is keeping a close eye on Middle Eastern military tensions, international oil price trends, and the earnings of major tech companies. However, analysts point out that investors should avoid falling into the trap of short-term volatility tied solely to war-related news.

Depending on whether the rise in oil prices remains a temporary risk premium or leads to supply disruptions and surging inflation, the direction of the market could vary significantly. Amid unresolved geopolitical anxieties, market recovery cannot be decided solely by growth expectations for the AI industry. Voices from the market suggest it is time to examine the signals sent by international oil prices, Treasury yields, and corporate earnings altogether.

[ⓒ Global Economic Times. 무단전재-재배포 금지]