LIVE MARKETS-Wall Street retreats as Trump snuffs out Iran de-escalation hopes

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WALL STREET RETREATS AS TRUMP SNUFFS OUT IRAN DE-ESCALATION HOPES

U.S. stocks gave back a chunk of their recent gains early Thursday, the morning after President Donald Trump's saber-rattling address sent crude prices surging and tossed cold water on risk appetite.

In contrast to recent remarks that gave rise to hopes of an imminent end to the war on Iran, Trump's prime-time vow to step up attacks and "bring them back to the Stone Ages where they belong" handily took the air out of the market's fragile hopes that the Strait of Hormuz could soon be open for business, relieving crude supply pressures that have re-ignited stagflation fears in recent weeks.

All three major U.S. stock indexes are sharply lower out of the gate, giving up large chunks of their biggest two-day rally since May.

"The threat of escalating attacks while reiterating that the US military operation can wind down in the next two-three weeks failed to underpin sentiment ahead of what will be a long holiday weekend for many," according to a note from Bannockburn Capital Markets. "Risk appetites have been squashed."

Chips .SOX, Airlines .SPCOMAIR and travel/leisure indexes .SPCOMHOTL are early underperformers, with every member of the Magnificent Seven group of artificial intelligence-related momentum stocks suffering steep drops.

Unsurprisingly, energy .SPNY is providing a rare glimpse of green due to spiking oil prices.

Consumer staples .SPLRCS and utilities .SPLRCU are also enjoying modest gains.

On the economics front, a dip in jobless claims and a narrower-than-expected international trade gap did very little to budge investor sentiment.

Here's where things stood as of 9:40 a.m. EDT:

(Stephen Culp)

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