Stocks experienced a significant decline on Thursday while oil prices surged, reflecting a shift from optimism to uncertainty in Wall Street regarding a potential resolution to the U.S.-Israeli conflict with Iran.
The S&P 500 plummeted by 1.7%, marking its most substantial single-day drop since January and putting it on course for a fifth consecutive week of losses. This losing streak, dating back to before the conflict started on February 28, could be the lengthiest in almost four years.
The Dow Jones Industrial Average tumbled by 469 points (1%), and the Nasdaq composite plunged by 2.4%, falling over 10% below its previous record high earlier this year, signaling what professionals refer to as a “correction.”
Global stock markets also experienced sharp declines in Asia and Europe, adding to the market volatility seen throughout the week. Despite initial optimism following U.S. President Donald Trump’s mention of productive discussions regarding the conflict’s resolution, Iran refuted engaging in direct talks and dismissed a proposed ceasefire delivered through Pakistan.
The conflict persisted on Thursday, with an increasing number of U.S. troops approaching the region while Iran tightened control over the strategic Strait of Hormuz, potentially creating obstacles for tankers navigating through the vital waterway responsible for a significant portion of global oil transport.
Brent crude oil prices surged by 4.8% to reach $101.89 per barrel, reflecting fading hopes for a swift resolution in the strait, up from around $70 before the conflict’s onset. Similarly, benchmark U.S. crude climbed by 4.6% to $94.48 per barrel.
President Trump initially issued firm warnings to Iran’s negotiators, but later softened his stance by delaying the threat to target Iranian power plants until April 6 to allow for further negotiation time. This shift in rhetoric led to a slight retreat in oil prices, with Brent crude edging back towards $100 per barrel, while Treasury yields moderated their sharp increase in the bond market.
The 10-year Treasury yield surged to 4.43% from 4.33% the previous day and 3.97% before the conflict began, causing concerns about higher borrowing costs for mortgages and loans, potentially impacting consumer spending and business investment.
Tech stocks faced notable declines on Wall Street, with Meta Platforms and Alphabet leading the losses. Meta Platforms fell by 8%, and Alphabet by 3.4% following a legal ruling holding them accountable for social media addiction. Other tech giants like Nvidia and Amazon also saw declines, while Apple managed a marginal uptick.
Commercial Metals reported weaker-than-expected profits, attributing the shortfall to adverse weather conditions affecting its North American operations, leading to a 4.7% drop in its stock. Overall, the S&P 500 closed at 6,477.16, down by 7.2% from its peak, while the Dow Jones Industrial Average fell to 45,960.11, and the Nasdaq composite to 21,408.08.
Global markets mirrored the downturn, with Germany’s DAX, Hong Kong’s Hang Seng, and South Korea’s Kospi all registering losses, with Japan’s Nikkei 225 reporting a relatively modest decline at 0.3%.