"Trump Weighs Deploying Ground Troops" report sends major indexes sharply lower [New York market briefing]

Major U.S. stock indexes closed lower in New York. Investor sentiment deteriorated sharply after reports said U.S. President Donald Trump is seriously considering deploying ground troops to Iran.

On the 20th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 443.96 points (0.96%) from the previous session to 45,577.47, the Standard & Poor’s (S&P) 500 slid 100.01 points (1.51%) to 6,506.48, and the Nasdaq Composite plunged 443.08 points (2.01%) to 21,647.61.

As the situation in the Middle East war deteriorated, risk-off sentiment strengthened.

First, Iran struck Kuwait’s energy infrastructure again. Kuwait Petroleum Corporation (KPC) said, “The Mina Al-Ahmadi refinery complex was hit by a drone attack early this morning, and fires broke out in multiple units,” adding, “As a precautionary measure, we have suspended operations at parts of the affected facilities.” The reason the Middle East war is jolting the global economy is disruptions to oil and gas supplies.

After news that Iran hit energy facilities in Gulf countries, reports emerged that President Trump is considering deploying ground troops. Reports also said the U.S. Marine Corps has been reinforced in Iran. CBS said the U.S. Department of Defense has made detailed preparations to deploy ground forces to Iran and that Trump is weighing the plan. In particular, there were also reports that about 2,200 to 2,500 Marines previously stationed in California headed toward Iran on three warships.

The S&P 500 at one point extended its intraday losses to more than 2%. The Russell 2000, made up mainly of small- and mid-cap stocks, tumbled more than 2%, entering correction territory.

By sector, utilities and real estate fell about 4% and about 3%, respectively. Technology, communication services, materials and consumer discretionary were also down around 2%.

By stock, Nvidia dropped more than 3%, while Alphabet, Tesla and Meta also fell around 3%.

ASML fell 3.6%, Micron Technology slid 4.81%, and Palantir also retreated 3.21%. Intel dropped 5%.

According to the CME FedWatch Tool, the federal funds futures market is pricing in a 66.6% probability that the benchmark rate will be left unchanged through the end of December this year. That is down from 80.3% near the prior session’s close. Meanwhile, the probability of a 25bp rate hike by year-end rose to 23.2%.

The Cboe Volatility Index (VIX) rose 2.72 points (11.31%) from the previous session to 26.78.

Han Kyeong-woo, Hankyung.com reporter case@hankyung.com