NEW YORK (AP) — Stocks had a rough start but bounced back somewhat after two days of good gains. The S&P 500 dipped 0.2% after an early drop of 1.5%. The Dow fell by 154 points, or 0.3%. Meanwhile, the Nasdaq composite also lost 0.3%. European markets reduced their earlier losses.
Oil prices continued to rise, even though they pulled back from earlier highs. U.S. crude briefly hit nearly $114 a barrel.
This turbulence in trading follows a speech from President Donald Trump, in which he emphasized the U.S. will maintain its military pressure on Iran. His comments seemed to dampen hopes for an end to the ongoing conflict in the Middle East, which had been lifting stock prices earlier in the week.
Despite these fluctuations, major stock indexes are expected to finish the week with gains. Thursday marked the final trading day of the week, with the stock market closing for Good Friday.
Crude oil prices have heavily influenced the stock market’s ups and downs globally. Notably, shipping through the Strait of Hormuz—a crucial oil passage—has faced serious disruption. The region accounts for about 20% of global oil trade during peaceful times.
Brent crude, the international benchmark, rose 6.5% to $107.72 per barrel. U.S. benchmark crude surged by 11.3% to $111.44 per barrel. Prior to Trump’s speech, prices were nearing $100, showing how sensitive they are to geopolitical events. Although the U.S. imports only a small portion of its oil from the Persian Gulf, global markets are interconnected, meaning disturbances anywhere can impact prices everywhere.
Since the start of the war, the stock market has often reacted sharply to news related to the conflict. Just a few days ago, the S&P 500 approached a 10% drop from its peak, creating what is known as a “correction.” Stemming from concerns surrounding inflation and interest rates, Adam Turnquist, chief technical strategist at LPL Financial, noted that prolonged conflict elevates the risk of sustained inflation pressures. These factors put further strain on global growth and equity valuations.
Travel-related companies struggled on Thursday, with United Airlines down 4.1% and Carnival Cruises dropping 4%. In contrast, some major tech stocks saw gains; Intel rose by 3%, and Advanced Micro Devices climbed 1.6%.
Meanwhile, U.S. Treasury yields remained stable, with the 10-year yield dropping slightly to 4.30% from 4.32%.
Wall Street is increasingly concerned that rising energy prices are contributing to higher inflation, already above the Federal Reserve’s 2% target. The average gas price in the U.S. is up more than 33% since last month, hitting $4.08 per gallon (AAA). This surge directly impacts consumers and indirectly raises costs across various goods and services, from airline tickets to everyday items.
Inflation continues to be a crucial issue for the Federal Reserve. The combination of war and rising energy costs is pushing inflation higher, complicating hopes for interest rate cuts. Earlier this year, traders expected multiple cuts to the Fed’s benchmark rate, which influences mortgage and loan rates. Now, predictions suggest the rate will stay put this year.
The conflict with Iran has overshadowed other economic indicators the Fed and Wall Street are monitoring. Despite the uncertainty, some recent reports show consumer confidence is intact, with spending continuing. However, rising mortgage rates pose challenges for potential homebuyers. A forthcoming report will shed light on the job market’s current state.
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