The three major U.S. stock indexes in New York slumped.

As the full-scale war between the United States and Iran continues, the closure of the Strait of Hormuz by the Iranian military stoked panic selling.

President Donald Trump unveiled naval escort measures to stabilize oil prices, and bargain hunting also emerged, but it was not enough to fully overturn selling pressure.

On the 3rd (U.S. Eastern Time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average finished at 48,501.27, down 403.51 points (0.83%) from the previous session.

The S&P 500 fell 64.99 points (0.94%) to 6,816.63, and the Nasdaq Composite dropped 232.17 points (1.02%) to 22,516.69.

The main indexes again opened lower with a gap down. As oil prices surged for a second day due to Iran's closure of the Strait of Hormuz, worries about inflation and a global slowdown eroded sentiment.

Although U.S. forces swiftly eliminated leaders in Iran, concerns about a prolonged conflict persist. This is because the Iranian military and pro-Iran forces in the Middle East could induce insecurity through guerrilla-style tactics and drag it into a long war.

Jeffrey O'Connor, head of U.S. equity market structure at Liquidnet, said, “The burden of a potential prolonged conflict could weigh on the market for weeks,” and “Historically, U.S. equities have been able to look through such geopolitical shocks, but a shutdown of the Strait of Hormuz is by no means something to take lightly.”

The oil price stabilization measures announced by President Trump did somewhat ease market anxiety.

Trump said that day “He directed the U.S. International Development Finance Corporation (DFC) to provide political risk insurance and guarantees for all maritime trade passing through the Gulf at very reasonable prices,” and “if necessary, the U.S. Navy will begin convoy operations as quickly as possible for tankers transiting the Strait of Hormuz.”

On this news, crude sharply pared its gains, and U.S. Treasury yields also reduced their rise. The 2-year yield fell by about 10 bp from the peak.

Even so, sentiment in equities did not fully recover. The major indexes trimmed losses, then widened them again toward the close.

The market appeared particularly concerned that a prolonged closure of Hormuz would hit key Asian economies.

Roughly 80% of the crude passing through the Strait of Hormuz is bound for South Korea, Japan, China, and India. A blockade there would disrupt production and supply at core hubs of global manufacturing.

Key Asian countries have stockpiled several months of crude, but a Hormuz blockade is inevitably a potential risk. If manufacturing output in the region slows, the U.S. hardware market would inevitably take a hit.

The Philadelphia Semiconductor Index plunged 4.58%, the biggest drop among the gauges, reflecting those worries. If bottlenecks arise in the Asian semiconductor market, U.S. chip and artificial intelligence (AI) companies would have no choice but to reassess their earnings outlooks.

By sector, all groups fell, with materials down 2.69% for the largest decline. Technology, industrials, and health care also fell by around 1%.

All 30 components of the Philly index declined, with Micron Technology plunging 8%. Intel, KLA, Applied Materials, and Lam Research also fell by around 6%.