The S&P 500 gave back its entire daily gain and closed lower on Thursday, as an escalation in the Iran war triggered a broad pullback in technology stocks, The Kobeissi Letter reports. The index had been trading in positive territory earlier in the session before reversing course, a move Kobeissi tied directly to the intensifying conflict, now in its 145th day after Iran rejected a US-brokered ceasefire proposal put forward by Iraqi mediators. The reversal landed on a day already crowded with unsettling cross-currents for markets. Intel's post-earnings rally evaporated, wiping out roughly $90 billion in market value, and the 30-day correlation between AI infrastructure stocks and the semiconductor index had separately collapsed toward zero, the lowest in more than four and a half years. Taken together, the day's price action suggests investors are growing more selective and more nervous at the same time, willing to sell first and ask questions later when geopolitical risk resurfaces, even against a backdrop of record equity ETF inflows earlier in the year. Oil and Treasury markets have already been carrying a war-risk premium for months, and a longer, more uncertain conflict raises the odds that equity markets start pricing in the same risk more persistently, rather than treating each escalation as a one-day scare.
Why it matters · A single afternoon erased the market's gains and roughly $90 billion of Intel's value at the same time the AI trade's internal correlations are breaking down, together suggesting the market's tolerance for geopolitical risk is thinner than record equity inflows would imply.
Worth asking · Record money keeps flowing into US equity ETFs even as the Iran war grinds into its 145th day. Is this selloff just a one-day flinch, or the start of the market finally pricing in a war that shows no sign of ending?