New York, NY – Major U.S. stock indices closed mixed on Wednesday as investors grappled with the fallout from South Korean President Yoon Suk-yeol's declaration of martial law and escalating political tensions in France.

The Dow Jones Industrial Average dipped 76.47 points, or 0.17%, to close at 44,705.53. The S&P 500 index edged up 2.73 points, or 0.05%, to finish at 6,049.88, while the Nasdaq Composite gained 76.96 points, or 0.40%, to end at 19,480.91.

Market sentiment turned sour early in the session as news of South Korea's martial law declaration sparked uncertainty. Investors sought safety in U.S. Treasuries, sending yields lower, while the South Korean won weakened significantly against the dollar.

Adding to the market's woes were concerns about political instability in France. The French government's proposed austerity budget has sparked widespread protests, and Prime Minister Élisabeth Borne's decision to push the budget through without a parliamentary vote has deepened the political crisis.

However, U.S. equities staged a rebound in the afternoon, with the Nasdaq leading the gains. The reversal was attributed to South Korea's National Assembly voting to lift the martial law declaration, easing concerns about a prolonged political crisis.

"The imposition of martial law by the South Korean president and its subsequent lifting by the National Assembly created confusion among investors who had sought refuge in traditional safe-havens," said Krishna Guha, global policy strategist at Evercore ISI. "While the overall impact on the market has been relatively muted so far, we have seen flows into safe-haven assets such as U.S., Japanese, and Swiss government bonds."

Guha noted that South Korea's significant role in the global supply chain warrants close monitoring. "Although this turmoil has not yet had a substantial impact on global financial markets, the increased flow of funds into safe-haven assets highlights the need for continued vigilance," he added.

While the broader U.S. market experienced relatively modest movements, South Korea-focused exchange-traded funds (ETFs) exhibited significant volatility. The iShares MSCI South Korea ETF (EWY) plunged as much as 7.1% during the session, while the Franklin FTSE Korea ETF (FLKR) and the Matthews Korea Active ETF (MKOR) declined by 6.7% and 6.2%, respectively. However, these ETFs pared losses in the afternoon following the lifting of martial law.

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