Wall Street’s record-breaking rally paused on Wednesday, June 3, as escalating tensions between the U.S. and Iran triggered a sharp selloff across major indexes amid the biggest exchange of strikes since the ceasefire agreement was reached two months ago.
The Dow Jones Industrial Average plunged more than 600 points, while the S&P 500 ended its nine-day winning streak — its longest since 1995 — declining 0.75%. The Nasdaq Composite also slipped 0.9%, ending its recent record-setting run.
The renewed geopolitical tensions came after both Washington and Tehran accused each other of violating the April ceasefire agreement. U.S. Central Command claimed Iran launched strikes targeting the main U.S. naval base in Bahrain and a civilian airport in Kuwait, with reports confirming the death of an Indian national.
Iran’s foreign ministry, however, alleged that recent U.S. attacks on an empty Iranian tanker and Qeshm Island were launched from bases in Kuwait and Bahrain, warning that both nations would bear responsibility for any military action originating from their territory.
Kuwait rejected Iran’s allegations and responded by expelling two Iranian diplomats in protest over the attacks.
The latest flare-up pushed crude oil prices higher, with West Texas Intermediate (WTI) crude rebounding to $96 per barrel. Meanwhile, the benchmark U.S. 10-year Treasury yield climbed back to 4.5%.
Are U.S.-Iran Negotiations Suspended?
According to Iran’s Fars News Agency, citing members of Tehran’s negotiating team, communication channels with the U.S. remain open, although no significant progress has been achieved in ongoing talks.
The report added that any finalized U.S.-Iran memorandum of understanding (MoU) would follow a four-stage implementation mechanism. Iran has yet to send its response to Washington regarding the latest U.S. draft proposal.
U.S. Economic Data Remains Stable
Despite geopolitical uncertainty, U.S. economic data released on Wednesday remained relatively resilient. The Services PMI rose to 54.5 — its highest level in three months — while private payrolls increased by 122,000, largely in line with market expectations of 120,000.
The latest payroll gain also marked the strongest monthly increase since January 2025.
