Major U.S. stock indices fell sharply on Thursday amid escalating Middle East tensions and a surge in oil prices. The Dow Jones Industrial Average dropped over 500 points, while the S&P 500 and Nasdaq Composite also declined. Oil prices briefly spiked above $100 per barrel after Iran’s new Supreme Leader stated the Strait of Hormuz should remain closed as a pressure tool. Initial jobless claims held steady, and a sell-off in long-term government bonds pushed yields higher.
Most U.S. stocks continued to decline in Thursday’s trading session as the price of oil climbed and conflict in the Middle East persisted. New overnight attacks signaled the war involving the U.S., Israel, and Iran is far from over, with the Dow Jones Industrial Average leading losses of around 1.2%. The Nasdaq Composite and S&P 500 each fell by roughly 0.8%.
The oil sector has been heavily impacted by the war and economic uncertainty, with prices spiking above $100 a barrel before dipping back. Crude prices continued climbing after Iran’s new Supreme Leader, Mojtaba Khamenei, said the Strait of Hormuz should remain closed as “a tool to pressure the enemy.” West Texas Intermediate futures traded 9% higher at around $95 per barrel, while Brent crude futures advanced 8% to roughly $100.
Labor Department data showed initial jobless claims held steady week-over-week, with 213,000 filings in the week ended March 7. This figure was below economists’ expectations according to the latest jobs report. Furthermore, a sell-off in U.S. government long-term bonds has been seen during this tumultuous period.
Yields like the 10-year and 30-year are materially higher, partly reflecting rising inflation fears amid surging energy prices. Inflation expectations embedded in the bond market have moved higher, but so have real yields. The Street increasingly sees higher term premiums, heavy Treasury supply, and hesitant demand as part of the story.
