U.S. equities extended their decline on Friday, marking the fifth consecutive week of losses, the longest streak in almost four years. The S&P 500 dropped 1.7%, capping its worst week since the conflict with Iran commenced. The Dow Jones Industrial Average shed 793 points, or 1.7%, slipping over 10% from its recent peak, while the Nasdaq composite declined by 2.1%.
The Dow’s retreat now puts it in correction territory, defined as a 10% decline from a previous high, joining the Nasdaq which entered correction status the day before. This week, the U.S. stock market experienced fluctuations between gains and losses on a daily basis as optimism and pessimism regarding the conflict ebbed and flowed.
Conversely, in Canada, the primary stock index closed marginally higher, supported by gains in the basic materials sector. The S&P/TSX composite index concluded the day up 73.13 points at 31,960.65.
Following a challenging trading day on Thursday, U.S. President Donald Trump extended a deadline to potentially resolve the situation with Iran by April 6, conditional on the resumption of oil tanker movements through the Strait of Hormuz. Although oil prices initially retreated on this announcement, they resumed their upward trajectory later in the day.
Despite Trump’s extension, hostilities in the Middle East persisted, with Iran showing no signs of relenting and Israel threatening further escalation. This diplomatic uncertainty weighed on investor sentiment, as noted by Doug Beath, a global equity strategist at Wells Fargo Investment Institute.
The price of Brent crude, the global benchmark, surged 3.4% to $105.32 per barrel, up from around $70 before the conflict began. There are concerns that prolonged disruptions in oil and natural gas production in the Persian Gulf could lead to significant inflationary pressures globally.
If the conflict persists until the end of June, analysts at Macquarie project oil prices could soar to $200 per barrel, a record high. On Wall Street, most stocks declined, with the S&P 500 sitting 8.7% below its peak. Big Tech firms, as well as non-essential consumer goods companies, faced notable losses.
Across global stock markets, European indexes fell after mixed results in Asia. In the bond market, Treasury yields fluctuated, with the 10-year Treasury yield rising before retreating slightly, impacting mortgage and loan rates. These developments tie back to concerns raised by Trump over a year ago regarding potential tariff impacts on the economy.
