‘Thud’ on Strait of Hormuz blockade… ‘3x Korea stock market ETF’ plunges 31% [New York Market Briefing]

Hormuz blockade triggers panic selling

Wall Street’s three major stock indexes fell. With a full-scale war between the U.S. and Iran continuing, the Iranian military’s move to block the Strait of Hormuz stoked panic selling.

On the 3rd (local time), the Dow Jones Industrial Average on the New York Stock Exchange (NYSE) closed down 403.51 points (0.83%) at 48,501.27. The S&P 500 fell 64.99 points (0.94%) to 6,816.63, while the Nasdaq Composite slid 232.17 points (1.02%) to finish at 22,516.69.

As oil prices surged for a second straight day on Iran’s blockade of the Strait of Hormuz, concerns over inflation and a global growth slowdown dampened risk appetite. Although the U.S. military swiftly took out Iran’s top leadership, fears of a protracted conflict remain. The Iranian military and pro-Iran forces in the Middle East could try to draw out the fight by fueling security instability through guerrilla-style tactics.

President Donald Trump’s measures to stabilize oil prices did ease some of the market’s anxiety. Trump said he had “instructed the U.S. International Development Finance Corporation (DFC) to provide political risk insurance and guarantees at very reasonable prices for all maritime trade passing through the Persian Gulf,” adding, “If necessary, the U.S. Navy will begin convoy operations for oil tankers transiting the Strait of Hormuz as quickly as possible.”

The major indexes pared losses but widened them again toward the close. The market appears to have been particularly concerned that a prolonged blockade of Hormuz would hit major Asian economies.

About 80% of the crude oil that passes through the Strait of Hormuz is bound for South Korea, Japan, China and India. If the passage is blocked, production and supply disruptions would emerge at key global manufacturing hubs.

A slowdown in manufacturing output in the region would also inevitably hit the U.S. hardware market.

The Philadelphia Semiconductor Index’s 4.58% plunge—steeper than other benchmarks—reflected these concerns.

U.S. semiconductor and artificial intelligence (AI) companies are also expected to face knock-on effects.

By sector, all groups declined, with materials posting the biggest drop at 2.69%. All 30 components of the Philly index fell, with Micron Technology tumbling 8%.

Intel, KLA, Applied Materials and Lam Research also fell around 6%.

Among mega-cap tech firms with market capitalizations of more than $1 trillion, Microsoft, Amazon and Meta led gains. Nvidia and Broadcom were down in the 1% range, and declines for the rest were not large.

As hardware stocks sank, software shares—previously swept up in the selloff—rebounded. IGV, a representative software-sector exchange-traded fund (ETF), rose 1.63%.

The Direxion Daily MSCI South Korea Bull 3X Shares (KORU), an ETF that tracks MSCI’s Korea index with 3x leverage, plunged 31%. It showed extreme volatility, with losses widening to as much as 45% intraday.

Shin Min-kyung, Hankyung.com reporter radio@hankyung.com