Oil prices jump as US and Iran tensions reignite supply fears

After a sharp multi-day slide, crude oil reversed hard on Wednesday. Brent climbed more than 4% to near $88 a barrel, clawing back some of its decline over the prior three sessions as the US military said it had intercepted an Iranian attempted surprise attack on American troops stationed in the Middle East, reigniting tensions after several days of relative calm.

In the US market, Dow Jones notched a third straight winning day Tuesday, climbing over 500 points as a rotation out of chips into other sectors lifted the blue-chip average, while the S&P 500 edged up 0.2% and the Nasdaq slipped 0.2% its fifth consecutive down session, weighed down by chips even as the broader market found footing. Additionally, Apple briefly became the second publicly traded company in history to cross a $5 trillion market capitalization, with shares touching an intraday high near $342.89 on Tuesday. Wednesday's session opened choppy, with futures fluctuating after the Iran news drove oil higher and revived inflation concerns just ahead of the Fed decision.

The semiconductor unwind deepened again Wednesday. Asian tech stocks extended their sell-off, led by South Korea's SK Hynix, which slid more than 15% after missing analyst estimates despite posting record quarterly profit. Samsung Electronics lost over 8%. Nvidia closed roughly flat after opening lower, Intel dropped nearly 6%, AMD lost 8%, and memory names Micron, Seagate, Western Digital and Sandisk all fell sharply.

All eyes are now on the Federal Reserve meeting today. Fed funds futures traders are pricing in a nearly 70% likelihood the Fed holds rates steady at the current 3.5%–3.75% target range, though markets are also pricing in roughly an 80% probability of a hike in September.

In the commodities market, gold slipped about 1% to around $4,030 an ounce as a stronger dollar and Fed-decision uncertainty weighed on the precious metal, with the dollar hovering near a four-week high.