TORONTO — Stock markets in Canada and the U.S. lost ground on Wednesday as oil prices rose following a flare-up in hostilities that threatened the U.S.-Iran ceasefire.

The broad declines in the North American stock market came a day after fresh highs for the S&P/TSX composite index and S&P 500.

Anish Chopra, managing director with Portfolio Management Corp., said Wednesday’s market action was a “tug of war” between geopolitics and AI.

“When you take a big picture point of view, markets are back in risk-off mode, you’ve got stocks lower, oil higher, bond yields rising, and you’ve got the U.S. dollar firming up as Middle East tensions are causing investors to be more concerned about inflation risk,” he said.

On the flip side, Chopra said AI infrastructure names were holding up.

The S&P/TSX composite index was down 367.92 points at 34,801.54.

In New York, the Dow Jones industrial average was down 620.72 points at 50,687.07. The S&P 500 index was down 56.10 points at 7,553.68, while the Nasdaq composite was down 239.92 points at 26,853.98.

Weighing on the market was a climb of 1.9 per cent for the price of a barrel of Brent crude oil, the international standard, which brought it back to US$97.81. It rose after both the United States and Iran said they launched retaliations for earlier attacks or attempted ones.

The July crude oil contract was up US$2.26 at US$96.02 per barrel.

Oil prices remain below their peaks from earlier in the war with Iran, and hope seems to be remaining on Wall Street that the United States and Iran will ultimately agree to reopen the Strait of Hormuz to oil tankers. That would improve the global flow of crude and hopefully lower its price.

Such hopes, along with strong profit reports from U.S. companies, helped launch the S&P 500 on its nine-day winning streak that ended Wednesday, one day shy of its longest in three decades.

Palo Alto Networks helped drag the U.S. market lower, and it fell 5.6 per cent even though it reported profit for the latest quarter that topped analysts’ expectations. Investors may have been looking for even more after its stock came into the day with a surge of 61.3 per cent for the year so far, more than quintuple the S&P 500’s already big 11.2 per cent rise.

Stocks also felt pressure from higher yields in the bond market, which climbed with the price of oil. The yield on the 10-year Treasury rose to 4.49 per cent from 4.46 per cent late Tuesday and from just 3.97 per cent before the war began.

High yields worldwide are threatening to slow economies and undercut prices for stocks and all kinds of other investments.

On the TSX, declines in the basic materials sector led the overall index lower.

The August gold contract was down US$53.00 at US$4,466.90 an ounce.

“Gold is down because you usually get a safe haven bid, but that’s being offset by the increase in interest rates and the strengthening of the U.S. dollar,” Chopra said.

The Canadian dollar traded for 72.03 cents US compared with 72.29 cents US on Tuesday.

This report by The Canadian Press was first published June 3, 2026.

— With files from The Associated Press.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Daniel Johnson, The Canadian Press