Stocks experienced a notable decline on Thursday, accompanied by a surge in oil prices, as optimism on Wall Street regarding a potential resolution to the U.S.-Israeli conflict with Iran gave way to uncertainty.
The S&P 500 plunged by 1.7 percent, marking its most substantial drop since January and setting the stage for a fifth consecutive week of losses. This streak, predating the conflict that began on February 28, would represent the lengthiest downward trend in nearly four years.
The Dow Jones Industrial Average fell by 469 points, equivalent to a one percent decrease, while the Nasdaq composite plummeted by 2.4 percent, sliding more than 10 percent below its previous record high earlier this year, a significant enough decline to be termed a “correction” by professional investors.
Stock markets in Asia and Europe also experienced declines. This change in sentiment follows a tumultuous week in financial markets, which commenced with optimism following U.S. President Donald Trump’s remarks about productive discussions aimed at ending the conflict. However, Iran refuted claims of direct negotiations and rejected a U.S. proposal for a ceasefire delivered through Pakistan.
The conflict persisted on Thursday, with additional U.S. troops nearing the region, while Iran tightened its control over the critical Strait of Hormuz. This strategic waterway serves as a gateway for approximately one-fifth of the world’s oil shipments from the Persian Gulf to global customers, prompting concerns of potential disruptions.
The price of Brent crude oil surged by 4.8 percent to settle at $101.89 per barrel, as hopes faded for a swift resolution in the strait, up from around $70 before the conflict began. Similarly, benchmark U.S. crude climbed by 4.6 percent to $94.48 per barrel.
In a shift in rhetoric, Trump delayed his threat to target Iranian power plants until April 6, citing ongoing talks and expressing optimism despite media reports suggesting otherwise. Subsequently, oil prices moderated their gains, with Brent crude easing back towards $100 per barrel.
The bond market also experienced fluctuations, with the 10-year Treasury yield surging to 4.43 percent on Thursday from 4.33 percent the previous day and 3.97 percent before the conflict erupted. This spike in yields has already led to increased rates for mortgages and other loans, potentially stalling economic growth.
Tech stocks faced substantial losses on Wall Street, with Meta Platforms and Alphabet leading the decline. Meta Platforms dropped by eight percent, while Alphabet fell by 3.4 percent following a significant court ruling. Other prominent tech stocks, including Nvidia and Amazon, also registered declines.
Commercial Metals reported weaker-than-expected profits for the latest quarter, resulting in a 4.7 percent drop in its stock price. Despite challenges due to adverse weather conditions, the company’s CEO expressed optimism regarding market conditions.
Overall, the S&P 500 closed at 6,477.16, down by 114.74 points and 7.2 percent from its previous peak. The Dow Jones Industrial Average and the Nasdaq composite also recorded losses, dropping by 469.38 points to 45,960.11 and 521.74 points to 21,408.08, respectively.
International markets mirrored the downward trend, with Germany’s DAX, Hong Kong’s Hang Seng, and South Korea’s Kospi all experiencing declines, while Japan’s Nikkei 225 registered a milder loss of 0.3 percent.
