Stocks tumbled on Wall Street Thursday as oil prices surged to the highest level seen since the summer of 2024 due to the U.S.-Israeli conflict with Iran. The S&P 500 dropped by 0.6%, wiping out earlier gains for the year. The Dow Jones Industrial Average experienced a brief plunge of over 1,100 points before concluding with a 1.6% loss, while the Nasdaq composite slipped by 0.3%.
Global financial markets are closely tracking oil price movements, with sharp increases causing concerns about potential long-term impacts on the global economy, consumer spending, and interest rates. The price of U.S. benchmark crude rose by 8.5% to $81.01 per barrel, and Brent crude, the international standard, climbed by 4.9% to $85.41 per barrel, nearing its highest level in years.
Although oil prices retreated later in the day, easing losses in U.S. stocks, worries persist regarding the duration of oil production disruptions due to the escalating conflict with Iran. Consequently, gasoline prices in the U.S. have already risen, with the average gallon price reaching $3.25, up by nine percent from the previous week.
Analysts and investors express concerns that further spikes in oil prices, potentially reaching $100 per barrel, could strain the global economy. The uncertainty surrounding the situation has led to volatile swings in financial markets, with much hinging on developments in the Strait of Hormuz, a vital oil transit route.
Despite the ongoing market turbulence, professional investors advise maintaining patience, noting that historically, the U.S. stock market has rebounded swiftly post-conflicts, provided that oil prices do not escalate excessively. Notably, Big Tech and oil producer stocks have partially offset losses in the broader market, helping to contain the S&P 500’s weekly decline to 0.7%.
Airlines’ stocks faced significant declines on Thursday, with rising oil prices amplifying fuel costs and the conflict causing travel disruptions. American Airlines dropped by 5.4%, United Airlines by five percent, and Delta Air Lines by 3.9%. Additionally, smaller companies experienced notable losses, a common trend during economic uncertainty and rising interest rates, with the Russell 2000 index of small stocks leading the market decline by 1.9%.
While Asian markets rebounded following a previous day’s plunge, European indexes declined as oil prices surged. South Korea’s Kospi notably recovered by 9.6%, offsetting a significant drop from the day before, while France’s CAC 40 and Germany’s DAX fell by 1.5% and 1.6%, respectively.
