The escalation of the Iran conflict triggers a sell-off, with all three major US stock indices falling more than 1.5%, and popular Chinese concept stocks declining across the board.

Caixin News, March 13 (Editor: Niu Zhanlin)
On Thursday, U.S. stocks closed lower across the board as the hope for a quick de-escalation of the war was shattered by Iran’s new Supreme Leader’s first statement. This caused oil prices to surge close to $100 per barrel, heightening inflation concerns and prompting investors to heavily sell off equities.

All three major indices fell more than 1.5%, with widespread selling. Aside from the energy sector and some defensive stocks, most sectors experienced significant declines.

Iran’s new Supreme Leader, Mujtaba Khamenei, stated that Iran will continue to adopt strategic measures, including blocking the Strait of Hormuz, and will attack U.S. military bases in the Middle East.

Meanwhile, the International Energy Agency (IEA) warned that the Iran conflict is causing the largest-ever disruption to oil supplies, intensifying fears of rising inflation.

WTI crude futures for the near month rose 9.7% that day, while Brent crude gained 9.2%, reaching $100 per barrel.

White House Press Secretary Karine Jean-Pierre claimed on Thursday that the Trump administration is considering a temporary exemption from the century-old Jones Act to ensure the free transportation of energy and agricultural products between U.S. ports.

It is reported that the announcement regarding a 30-day exemption from the Jones Act could be made as early as Thursday, aiming to address the surge in fuel prices and other supply disruptions since the U.S.-Israel conflict with Iran began.

Ryan Detrick, Chief Market Strategist at Carson Group, said: “The market has realized that the resolution of the Middle East conflict could be further delayed. The current market sentiment is to sell first and think about fundamentals later. Apart from the energy sector, almost no other sectors are truly safe right now.”

The Federal Reserve will hold a monetary policy meeting on March 17. Although recent inflation data shows overall price growth remains manageable, the ongoing 13-day Iran war and soaring oil prices have yet to be reflected in the data.

Markets generally expect the Fed to keep the benchmark interest rate unchanged, but its latest economic projections (SEP) will be closely watched for signals on whether inflation expectations might be raised.

Beneath the surface of rising oil prices, markets are realizing that the likelihood of a Fed rate cut later this year is rapidly decreasing.

Market Dynamics

At the close, the Dow fell 739.42 points, or 1.56%, to 46,677.85; the Nasdaq dropped 404.16 points, or 1.78%, to 22,311.98; the S&P 500 declined 103.22 points, or 1.52%, to 6,672.58.

Among the 11 sectors of the S&P 500, industrials fell 2.52%, consumer discretionary dropped 2.21%, information technology/tech declined 1.72%, telecommunications fell 1.63%, financials declined 1.62%, while energy rose 0.98%.

In U.S. stock sector ETFs, the global airline ETF fell 3.97%, semiconductor ETF dropped 3.22%, biotech index ETF, global tech ETF, and consumer discretionary ETF all declined at least 2.30%, while energy ETF rose 0.93%.

Popular Stock Performance

Large tech stocks mostly declined: Nvidia down 1.55%, Amazon down 1.47%, Tesla down 3.14%, Meta down 2.55%, Apple down 1.94%, Microsoft down 0.75%, Google down 1.67%.

Concerns over private credit also continued to impact the market, with investors withdrawing from funds and companies that lend to potentially threatened firms.

Morgan Stanley imposed redemption restrictions on one of its private credit funds on Thursday, while JPMorgan Chase downgraded valuations of some private credit fund loans. The two banks’ stocks fell 4.1% and 1.6%, respectively.

Dating app Bumble surged 34.2% after its Q4 revenue guidance exceeded market expectations. Discount retailer Dollar General fell 6.1% due to disappointing full-year same-store sales growth forecasts.

Chemical companies LyondellBasell and Dow rose 10.3% and 9.3%, respectively, after Citigroup upgraded their ratings. Citi believes that disruptions in Middle Eastern supply chains will create new export opportunities for these companies.

The surge in fertilizer prices triggered by the Middle East conflict has led to significant gains for fertilizer producers, with CF Industries soaring over 13%, hitting a record high.

Nasdaq Golden Dragon China Index declined 1.03%, with most popular Chinese concept stocks falling. Xiaopeng Motors dropped 4.7%, Li Auto and Tencent fell over 2%, Alibaba down 1.5%, Pinduoduo down 1.28%, NIO up 1.46%, XPeng up 3.6%, and Fangdd Network up 16.4%.

Company News

【Amazon’s $54 Billion Bond Offering Sparks Frenzy】
This week, banks responsible for selling Amazon’s bonds sent a clear message to investors: in an increasingly unpredictable world, this company is a relatively safe investment. On Tuesday, Amazon issued $37 billion in bonds across 11 maturities in the U.S., with subscription orders reaching up to $1.26 trillion, nearing a record. On Wednesday, the company also issued bonds in the euro market for the first time, totaling €14.5 billion (about $16.8 billion), setting a record for the largest corporate bond issuance in the euro market. John Servidea, Co-Head of Investment-Grade Debt Capital Markets at J.P. Morgan, said Wall Street banks have been advising companies that this is a “market environment where a window can open and close quickly.”

【Google Launches AI Q&A Feature for Its Software】
Alphabet is undergoing its biggest upgrade to its mapping product in over a decade. It introduced a new feature called “Ask Maps” in Google Maps, allowing users to interact with the app as if chatting with a chatbot. Miriam Daniel, Vice President and General Manager of Google Maps, wrote in an official blog: “We’ve combined the latest global maps with our most powerful Gemini model, making exploration easier and more intuitive, and delivering an unprecedented navigation experience through the largest upgrade in over ten years.”

【Microsoft and Meta Drive Data Center Leasing to $700 Billion】
Microsoft and Meta have each added nearly $50 billion in data center leasing commitments in the recent quarter to support AI development. Including Oracle and Amazon, the world’s largest cloud providers have now committed over $700 billion in future data center leases. These commitments, covering data centers, offices, or warehouses, will be paid in installments over 15-19 years.