The oil surge

U.S. benchmark crude crossed $90 a barrel for the first time since 2023, jumping 12.2% to settle at $90.90. Brent crude leaped 8.5% to $92.69, touching above $94 intraday before pulling back. Brent had stood near $70 just a week earlier.

The Iran war’s expansion into areas central to the production and movement of oil and gas in the Middle East drove the surge, according to the Associated Press. Much will depend on what happens at the Strait of Hormuz, off Iran’s coast, through which roughly a fifth of the world’s oil typically passes.

The Trump administration released details Friday of a plan to provide insurance for ships crossing the strait, but the announcement had little effect on oil prices. President Trump’s most recent public signal on the conflict called for an “unconditional surrender” of Iran, apparently ruling out negotiations.

If prices spike further — to $100 per barrel and sustained — some analysts and investors said that could be too much for the global economy to withstand, according to the AP.

The jobs report and retail data

Separate from the oil shock, the February employment report showed U.S. employers shed more jobs than they added. A second report released the same day showed U.S. retailers made less money in January than economists had forecast, raising concern that American household spending — the primary engine of the U.S. economy — may be stretched near its capacity.

The Federal Reserve’s bind

When economic growth weakens and the job market softens, the Fed typically responds by cutting interest rates, which can ease mortgage and business borrowing costs and lift asset prices. The Fed cut its main rate several times in 2025 and had signaled more reductions were coming this year.

But lower rates can also fuel inflation, and with oil prices driving energy costs sharply higher, the central bank’s ability to provide economic support may be increasingly constrained.

The 10-year Treasury yield, a benchmark that sets mortgage and corporate borrowing costs, closed at 4.13% on Friday — up from 3.97% a week earlier — as oil-driven inflation expectations and weak economic data pulled the rate in competing directions.

Sector and small-cap losses

Smaller companies absorbed the steepest losses. The Russell 2000 index of small stocks fell 2.3%, the largest decline among major U.S. equity indexes on the day. Small companies typically carry higher sensitivity to U.S. economic conditions and face proportionally heavier borrowing costs in a high-rate environment.

Among large-cap stocks, companies with high fuel costs bore the sharpest declines. Old Dominion Freight Line sank 7.9%. Carnival fell 5%. Southwest Airlines lost 5.3%.

The Dow fell as many as 945 points during the session before recovering partially to end down 453.19 points, or 0.9%, at 47,501.55. The S&P 500 fell 90.69 points to 6,740.02. The Nasdaq composite, which closed at 22,387.68, fell 1.6%.

Global markets

Overseas equity markets were mixed. London’s FTSE 100 fell 1.2%. Hong Kong’s Hang Seng rose 1.7%.

South Korea’s Kospi — which had plunged 12.1% Wednesday, its worst loss in history, and rebounded 9.6% Thursday — ended Friday nearly unchanged.