Stocks moved mostly lower across the board on Wednesday, pulling back after trending higher over the course of several recent sessions.
The Dow Jones Industrial Average closed down 620.72 points, or 0.7 percent, finishing the session at 50,687.07.
The Nasdaq slid 239.93 points, or 0.9 percent, to settle at 26,853.98, while the S&P 500 fell 56.10 points, or 0.7 percent, to 7,553.68.
The selloff came amid ongoing uncertainty surrounding the situation in the Middle East, as negotiations between the U.S. and Iran continued to drag on.
U.S. Central Command said U.S. forces successfully defeated multiple Iranian ballistic missiles and drones and conducted “self-defense” strikes on Qeshm Island in response to attempted attacks by Iran on Tuesday.
The sustained military exchanges contributed to a sharp rise in crude oil prices, with U.S. crude oil futures surging by more than 2 percent on the day.
Despite recent geopolitical tensions, stocks had largely shrugged off Middle East concerns in prior sessions due to optimism around earnings and economic growth.
“For now, risk appetite remains supported, but with stretched valuations and shifting monetary policy expectations, markets appear increasingly sensitive to any signs that the earnings and growth story may begin to soften,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
On the economic data front, the Institute for Supply Management reported that its services PMI rose to 54.5 in May from 53.6 in April, topping economist expectations of 53.7.
A reading above 50 indicates expansion, and the stronger-than-expected result signaled continued resilience in the U.S. service sector for the month of May.
Software stocks led declines on the day, with the Dow Jones U.S. Software Index diving by 4 percent during the session.
A pullback in gold prices also dragged on gold stocks, as the NYSE Arca Gold Bugs Index plunged by 3.6 percent.
Telecom, airline, and networking stocks also saw significant weakness throughout the day, adding further pressure to the broader market.
Biotechnology, oil, and semiconductor stocks showed relative strength, helping to limit steeper losses across the major averages.
In overseas markets, Japan’s Nikkei 225 Index surged by 2.5 percent, while Hong Kong’s Hang Seng Index tumbled by 1.6 percent during Wednesday’s session.
European markets closed broadly lower, with Germany’s DAX Index slumping 1.3 percent, France’s CAC 40 sliding 0.7 percent, and the U.K.’s FTSE 100 falling 0.4 percent.
In the bond market, the yield on the benchmark ten-year Treasury note climbed 3.6 basis points to 4.491 percent, as rising crude oil prices pushed bond prices lower.
