Middle East Tensions and Fed Infighting Spark Wall Street Rout

Wall Street suffered its worst day since April 2025 on Tuesday as tensions in the Middle East and hawkish dissent within the Federal Reserve sent shockwaves through markets.

The Dow Jones Industrial Average plummeted 1,153.18 points, or 2.19%, to close at 51,594.14, while the S&P 500 dropped 112.63 points, or 1.52%, to 7,316.15.

Escalating geopolitical risk in the Middle East led to a surge in oil prices, with West Texas Intermediate crude for September delivery rising 6.56% to settle at $84.46 per barrel and Brent crude for September delivery surging 7.91% to $90.74 per barrel.

The Federal Reserve's decision to keep interest rates steady at 3.50%-3.75% was seen as a hawkish hold, with three regional Fed presidents dissenting in favor of a rate hike, sparking concerns about inflation anxiety within the central bank.

The semiconductor sector suffered particularly badly, with the Philadelphia Semiconductor Index plunging 5.33% and major tech stocks such as Nvidia, AMD, and Intel falling significantly.