Oil at $100 lifts risk-off sentiment as stocks slide worldwide
Oil prices jumped back to around $100 a barrel on Thursday as markets grappled with the prospect that the war with Iran could disrupt crude flows for longer than investors had hoped, and stocks fell worldwide. The S&P 500 fell 1.5% and resumed sharp swings after a couple days of relative calm, while the Dow Jones Industrial Average declined 739 points, or 1.6%, and the Nasdaq composite dropped 1.8%.
In trading, the center of attention stayed with the oil market as Brent crude, the international benchmark, climbed 9.2% to settle at $100.46 a barrel. The AP reported worries that the war could block Persian Gulf production for a long time and contribute to a debilitating surge of inflation across the global economy.
Iran’s leadership also fed the price pressure. The AP reported that Iran’s new supreme leader released his first statement Thursday since succeeding his late father, saying Iran would keep up attacks on Gulf Arab neighbors and use the effective closure of the Strait of Hormuz as leverage against the United States and Israel. The Strait of Hormuz is a critical shipping chokepoint, with about a fifth of the world’s oil typically passing through it, according to the AP report, and oil producers in the region have been cutting production because their crude has nowhere to go.
The International Energy Agency tried to reassure markets on the supply side. The AP said the agency told reporters Wednesday that its members would release a record amount of oil—400 million barrels—pulled from stockpiles built for emergencies. Still, the AP said such measures are short-term fixes that do not eliminate the longer-term risk of prices rising further if the Strait of Hormuz remains closed; analysts cited by AP said oil could jump to $150.
Even with that backdrop, the stock selloff on Thursday reflected more than oil alone. The AP noted that U.S. equities have tended to bounce back relatively quickly from Middle East military conflicts as long as oil prices do not stay too high for too long. It said the S&P 500 is 4.4% below its all-time high set in January, despite the up-and-down swings seen over the past few weeks.
Thursday also brought a mix of macro and company-specific signals. The AP said hiring by U.S. employers last month was surprisingly weak, raising worries about a worst-case scenario dubbed “stagflation”—a combination of stagnant growth and high inflation that leaves the Federal Reserve with limited tools. At the same time, the AP said a report Thursday indicated the number of U.S. workers applying for unemployment benefits edged lower last week, which it described as a sign layoffs were potentially remaining low around the country.
In corporate news, Dollar General reported better profit and revenue than analysts expected, but its forecast for revenue for the upcoming year pointed to a potential slowdown in growth, and its stock fell 6.1%. The AP said some of the biggest losses again hit companies with large fuel bills: Carnival fell 7.9% and United Airlines sank 4.6%.
The broader financial-services stress also lingered. The AP said investors continued to pull money from some private-credit funds and companies that lend to businesses whose profits are under threat, with worries focused on borrowers that may struggle to repay loans because of competition from AI-powered rivals. Morgan Stanley fell 4.1% after its North Haven Private Income Fund allowed investors to redeem 5% of total shares instead of nearly 11% of requests; the AP said the 5% cap was the fund’s advertised limit.
Globally, markets tracked the risk appetite shift. The AP reported indexes fell across Europe and Asia, including Japan’s Nikkei 225 down 1% and France’s CAC 40 down 0.7%. In the bond market, rising oil prices contributed to Treasury yield pressure, and the AP said the 10-year Treasury yield rose to 4.26% from 4.21% late Wednesday and from 3.97% before the war started, pushing back traders’ expectations for when the Federal Reserve could resume interest-rate cuts.
The knock-on effects of higher yields reached beyond bonds. The AP said higher yields make borrowing more expensive—including mortgages and corporate bond issuance—and push down prices for investments from stocks to crypto. It also reported that because of the oil-price spike, traders have adjusted expectations for the timing of Fed cuts, while President Donald Trump has been urging them, a stance described by the AP as potentially worsening inflation.
The AP reported that all told, the S&P 500 fell 103.18 points to 6,672.62, the Dow fell 739.42 to 46,677.85, and the Nasdaq composite sank 404.16 to 22,311.98. It also reported that a barrel of benchmark U.S. crude rose 9.7% to settle at $95.73.