Dow Falls 0.6% as U.S.-Iran Negotiation Uncertainty Weighs on Wall Street

The three major U.S. stock indexes closed lower on May 7 as uncertainty surrounding negotiations to end the conflict between the U.S. and Iran resurfaced. Semiconductor shares also came under pressure from profit-taking.

The Dow Jones Industrial Average fell 313.62 points, or 0.63%, to 49,596.97 at the close on the New York Stock Exchange. The S&P 500 dropped 28.01 points, or 0.38%, to 7,337.11, while the tech-heavy Nasdaq Composite slipped 32.75 points, or 0.13%, to 25,806.20.

The S&P 500 and Nasdaq had traded higher earlier in the session and both touched fresh intraday records. They later gave up those gains and turned lower in afternoon trading as doubts over U.S.-Iran negotiations returned to the fore.

The Wall Street Journal reported that a senior Iranian official said Iran would not allow the U.S. to reopen the Strait of Hormuz and exit the war without compensation.

The newspaper also said Saudi Arabia and Kuwait had reversed decisions barring U.S. military aircraft from using their airspace. Washington is considering resuming a so-called liberation project to help merchant ships stranded around the Strait of Hormuz escape, it added.

Oil pared its losses as concern mounted that tensions in the Middle East could flare again. Brent futures fell as low as $96 a barrel during the session, at one point dropping as much as 5%. They later trimmed those losses to settle down 1.2% at $100.06 a barrel. West Texas Intermediate futures closed at $94.81 a barrel, down 0.3%.

Semiconductor stocks, which had surged in recent sessions, fell as investors took profits. AMD dropped 3.10%, while Intel and Micron Technology fell 3.0% and 2.97%, respectively.

Arm Holdings, the British chip designer, tumbled 10.1% as doubts emerged over the production capacity of its artificial intelligence chips.

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