Energy market volatility and rising crude prices pressure U.S. stocks as investors weigh inflation risks and Federal Reserve policy.
By yourNEWS Media Newsroom
U.S. stock markets fell sharply Thursday as oil prices surged amid escalating conflict in the Middle East, fueling concerns about inflation and the potential delay of interest rate cuts by the Federal Reserve.
The Dow Jones Industrial Average declined 790.63 points, or 1.62%, closing at 47,948.78. The S&P 500 fell 39.37 points, or 0.57%, ending the session at 6,830.13, while the Nasdaq Composite dropped 58.18 points, or 0.25%, to finish at 22,749.31.
The decline came as oil markets reacted to the expanding military conflict involving Iran, which has raised fears of disruptions to global energy supplies. The Strait of Hormuz—one of the world’s most critical oil shipping corridors—has become a focal point of concern as missile and drone threats have significantly reduced tanker traffic moving through the region.
U.S. crude oil prices jumped roughly 8.5% to about $81 per barrel, marking their highest level since July 2024. Meanwhile, global benchmark Brent crude climbed 4.9% to $85.41 per barrel.
Market analysts said the surge in energy prices has intensified concerns that inflation could rise again, complicating expectations for monetary policy.
“Look at oil today, it tells you everything you need to know about why the stock market’s down,” said Michael Antonelli, market strategist at Baird Private Wealth Management. “The market is really trying to grapple with how long this conflict will last.”
Rising oil prices can increase transportation and production costs across the economy, potentially slowing economic growth while driving up consumer prices.
Sector losses were broad, with the S&P 500’s industrials, materials, and healthcare indexes leading the declines. Airline stocks were particularly hard hit as higher fuel costs threaten profitability across the aviation industry.
Losses in financial stocks also contributed to the Dow’s sharp decline, with shares of major banks including JPMorgan Chase and Goldman Sachs falling during the session.
Despite the broader market weakness, some technology companies helped limit losses. Chip designer Broadcom rose 3.2% after forecasting that revenue from artificial intelligence chips could exceed $100 billion next year.
Even with Thursday’s decline, U.S. markets have outperformed European and Asian markets during the week, largely due to strong gains in technology stocks that had previously fallen sharply during February’s market selloff.
Investors are closely monitoring oil markets for signs that crude prices could approach $100 per barrel, a level that analysts warn could significantly impact inflation and economic activity.
Economic data released Thursday also influenced market expectations. Stronger-than-anticipated results from the Institute for Supply Management’s manufacturing and services surveys suggested continued resilience in business activity.
Additionally, data showed the number of Americans filing new unemployment benefit claims remained unchanged from the previous week, signaling ongoing strength in the labor market.
Steve Ricchiuto, chief economist at Mizuho Securities, said the stronger economic indicators have led investors to reassess expectations for Federal Reserve policy.
According to market data compiled by LSEG, traders now expect the Fed’s first quarter-point interest rate cut to occur in October rather than July, reflecting concerns that inflation pressures could persist longer than previously anticipated.
With the U.S.-Israeli air campaign against Iran continuing and oil markets reacting to potential supply disruptions, investors remain focused on geopolitical developments that could shape energy prices and global economic conditions in the weeks ahead.
Original article
Comments