Nasdaq Falls 2% on US Ground Troop Concerns, Rate Hike Outlook

New York stocks fell sharply as the Trump administration raised the possibility of deploying ground troops to the Iran war and prospects for interest rate hikes this year gained attention.

“New York stocks fell sharply as the Trump administration raised the possibility of deploying ground troops to the Iran war and prospects for interest rate hikes this year gained attention”

Seoul Economic Daily

On the New York Stock Exchange on Tuesday, the Dow Jones Industrial Average closed at 45,577.47, down 443.96 points (0.96%) from the previous session.

Seoul Economic Daily

The S&P 500 fell 100.01 points (1.51%) to 6,506.48, while the Nasdaq Composite dropped 443.08 points (2.01%) to 21,647.61.

Among major technology stocks by market capitalization, Nvidia fell 3.24%, while Apple (-0.42%), Microsoft (-1.93%), Amazon (-1.67%), Alphabet (-2.03%), Meta (-2.18%), Broadcom (-3.01%), and Tesla (-3.28%) all declined.

Markets showed weakness from the opening bell on expectations that the four-week-old US-Iran war would become a prolonged conflict.

Axios reported, citing four sources, that President Trump is considering seizing or blockading Kharg Island, Iran's oil hub, to pressure Iran to open the Strait of Hormuz.

CBS reported, citing multiple sources, that senior US military commanders are preparing with troop deployment in mind.

Seoul Economic Daily

Two sources said military authorities had meetings to discuss handling Iranian soldiers and paramilitary personnel, as well as civilian evacuation issues, in case President Trump decides to deploy ground forces.

The Trump administration is preparing to deploy units from the US Army's 82nd Airborne Division to the Middle East region.

Earlier this week, approximately 2,200 Marines and three warships departed from California.

This marks the second Marine unit deployment since the start of the Iran war.

President Trump has not yet approved the deployment of ground troops.

White House Press Secretary Karoline Leavitt said, "It is the Department of Defense's mission to prepare to provide the commander-in-chief with maximum options, but this does not mean the president has made a decision."

She added, "As the president has stated, there are currently no plans to deploy ground troops anywhere."

According to the CME FedWatch, federal funds rate futures markets priced in a 65.5% probability that the Federal Reserve will hold rates at the current 3.50-3.75% level through year-end FOMC meetings, a 23.5% probability of a 0.25 percentage point hike, a 3.1% probability of a 0.50 percentage point increase, and a 0.2% probability of a 0.75 percentage point rise.

“New York stocks fell sharply as the Trump administration raised the possibility of deploying ground troops to the Iran war and prospects for interest rate hikes this year gained attention”

Seoul Economic Daily

In contrast, markets priced in only a 7.6% probability of a 0.25 percentage point cut and 0.1% probability of a 0.50 percentage point reduction.

As geopolitical concerns in the Middle East intensified, West Texas Intermediate crude for April delivery closed at $98.32 per barrel on the New York Mercantile Exchange, up $2.18 (2.27%) from the previous session.