Dow Jones falls as West Asia tensions dampen investor sentiments

Wall Street indices opened declined on Thursday as escalating tensions in West Asia dampened investor sentiment and uncertainty loomed over the latest trade agreement between the United States and China. The Dow Jones Industrial Average (.DJI) dropped 128.4 points, or 0.30%, to 42,737.36 at the opening bell. The S&P 500 (.SPX) slipped 12.3 points, or 0.20%, to 6,009.9, while the Nasdaq Composite (.IXIC) declined 37.0 points, or 0.19%, to 19,578.874.

Investor concerns intensified following the U.S. State Department’s decision to scale down its diplomatic presence in parts of West Asia. On Wednesday, the department ordered the departure of nonessential staff from the U.S. Embassy in Baghdad, citing the growing potential for regional unrest. Additionally, it authorised the voluntary departure of nonessential personnel and family members from U.S. missions in Bahrain and Kuwait. The embassy in Baghdad was already operating with limited staff.

Meanwhile, investors are awaiting further details on the recently announced U.S.-China trade deal. President Donald Trump revealed the agreement after days of negotiations between American and Chinese delegations in London, following prior talks in Geneva.

U.S. Commerce Secretary Howard Lutnick described the agreement as a “framework” to implement the Geneva consensus, emphasizing cooperation between the two nations. A key element of the deal is China’s commitment to supply rare earth minerals critical to U.S. industries such as automotive, semiconductors, and smartphones.

While Trump noted that China would begin supplying the minerals “upfront,” specific terms of the arrangement remain unclear. China holds a dominant position in the rare earth market, producing 60% and processing nearly 90% of global output—a strategic leverage point that has long concerned U.S. policymakers.