U.S. stocks experienced significant declines on Friday, marking the fifth consecutive week of losses, the lengthiest stretch in nearly four years. The S&P 500 dropped by 1.7%, concluding its worst week since the conflict with Iran commenced. Simultaneously, the Dow Jones Industrial Average tumbled by 793 points, or 1.7%, sliding more than 10% from its previous record established the prior month, while the Nasdaq composite plummeted by 2.1%.
The Dow’s decline now confirms a correction, defined as a 10% drop from a previous high, following the Nasdaq’s similar move the day before. Throughout the week, the U.S. stock market exhibited volatility, alternating between gains and losses as optimism fluctuated regarding a potential resolution to the conflict.
Contrastingly, Canada’s primary stock index closed marginally higher, supported by gains in the basic materials sector. The S&P/TSX composite index ended the day up 73.13 points at 31,960.65.
Following a bleak day of trading on Thursday, U.S. President Donald Trump extended a deadline to potentially target Iran’s power facilities to April 6 if Iran does not permit oil tankers to resume passage from the Persian Gulf through the Strait of Hormuz. While oil prices initially dipped post-Trump’s announcement, they resumed an upward trajectory as trading shifted back to Wall Street.
Despite Trump’s delay announcement, the conflict persisted in the Middle East, with Iran showing no signs of backing down and Israel threatening further escalation. This diplomatic uncertainty between the U.S. and Iran left investors disheartened, leading to diminished risk appetite amidst the ongoing conflict.
Oil prices surged, with Brent crude climbing 3.4% to $105.32 US per barrel, up from around $70 US prior to the conflict. The potential disruption to oil and gas production in the Persian Gulf poses concerns of prolonged market impacts, potentially triggering global inflation.
If the conflict persists through June’s end, analysts suggest oil prices could skyrocket to $200 US per barrel, setting a new record. On Wall Street, most stocks, particularly Big Tech shares, experienced declines, with companies reliant on discretionary spending witnessing sharp drops.
In global stock markets, European indexes fell following mixed results in Asia. Treasury yields fluctuated, with the 10-year Treasury yield reaching 4.48% before retracting to 4.43%, up from 3.97% pre-conflict. The rise in Treasury yields impacts mortgage and loan rates, potentially hampering economic growth. The bond market’s disruption and high Treasury yields were cited by Trump as factors influencing his tariff decisions.
