Nasdaq Slides 2.2% as Middle East Tensions, Oil Surge Weigh on Wall Street

The three major US stock indexes all closed lower on July 23 as escalating tensions in the Middle East and a sharp jump in oil prices rattled markets.

The Dow Jones Industrial Average fell 506.93 points, or 0.97%, to 51,711.65 on the New York Stock Exchange. The S&P 500 dropped 90.66 points, or 1.21%, to 7,408.30, while the tech-heavy Nasdaq Composite slid 553.21 points, or 2.15%, to 25,137.69.

Investors were shaken after Brent crude, the international oil benchmark, rose above $100 a barrel for the first time in two months. September Brent futures settled up 7.04% at $100.69 a barrel. September West Texas Intermediate crude futures climbed 6.17% to $92.19 a barrel. Brent marked its highest level since May 22, and WTI reached its highest since June 4.

Supply concerns intensified amid fears of disruptions to shipping through the Strait of Hormuz, a key route for global crude transport. Concerns also mounted after a Saudi Arabian oil tanker was attacked in the Red Sea.

The rise in oil prices added to inflation pressure and pushed Treasury yields higher. The yield on the 10-year US Treasury note rose 0.04 percentage point from the previous session to 4.70%. It was the first time the 10-year yield had moved above 4.7% since January 2025, the highest level in 18 months. That also revived expectations that the Federal Reserve could raise interest rates again.

Weekly initial jobless claims in the US fell to their lowest level since 1969, reaffirming the strength of the labor market. That added to the view that the Fed will remain focused on price stability.

Earnings from major technology companies also pressured stocks. Tesla shares sank 14.5% after the company said it posted negative cash flow for the first time in two years.

Alphabet, Google's parent, reported second-quarter results that beat market expectations. Its shares still fell 6.8% after free cash flow turned negative because of heavy investment in artificial intelligence infrastructure.

Daniel Skelly of Morgan Stanley said the spike in oil prices amid geopolitical uncertainty and worries over rising capital spending by the Magnificent Seven were putting significant pressure on the market. Stock volatility could continue for the time being if AI companies fail to prove they can sustain their upward momentum.

Jeong-sam Go, Hankyung.com reporter, jsk@hankyung.com