Wall Street’s major indices experienced sharp declines on Thursday, marking the end of a holiday-shortened week, following U.S. President Donald Trump’s announcement of a more aggressive stance towards Iran. This news dampened hopes for a quick resolution to the conflict in the Middle East.
In a prime-time address, Trump indicated a ramp-up in military operations over the next two to three weeks, a stark departure from his previous statement suggesting a swift withdrawal from Iran. This shift left market strategist Art Hogan expressing concerns about the lack of new information and the challenge of finding a peaceful resolution.
The escalation in tensions led to a notable spike in oil prices, with Brent crude futures reaching $108 per barrel, prompting a rise in energy stocks such as Exxon Mobil and Chevron by more than 2%. The S&P 500 energy index also saw a gain of 2.4%.
Conversely, the surge in oil prices put pressure on airline stocks, resulting in losses for major carriers like United Airlines, Delta Air Lines, and American Airlines, which declined between four and six percent.
Additionally, concerns over private credit emerged as Blue Owl limited investor withdrawals from two retail-focused funds, causing its shares to drop by eight percent. This development also impacted other asset managers, including Apollo Global, Blackstone, and Ares Management, which saw declines ranging from 3.5% to 4.3%.
Financial shares decreased by 1.1%, while technology stocks slid by 1.8%, with companies like Micron, Lam Research, and Sandisk experiencing losses exceeding 3%.
By 9:50 a.m. ET, the Dow Jones Industrial Average had fallen by 565.37 points, the S&P 500 lost 79.70 points, and the Nasdaq Composite dropped by 367.70 points. The Russell 2000 index also saw a decline of 1.3%, with the CBOE VIX index, a measure of market volatility, rising to 26.79 points.
Earlier in the week, optimism about a resolution to the conflict had boosted market sentiment, with Wall Street heading towards its most significant weekly gain in four months and its first weekly increase in six weeks.
In March, the S&P 500 and the Nasdaq experienced their largest monthly losses in a year, while Brent crude prices had their best monthly performance on record. The uncertainty in the market has led money market participants to no longer expect any easing from the Federal Reserve, with energy-related inflation concerns clouding the central bank’s monetary policy outlook.
Looking ahead, investor focus will turn to Friday’s nonfarm payroll numbers, although U.S. markets will be closed for the Good Friday holiday. Developments related to Elon Musk’s SpaceX, which filed for a U.S. initial public offering aiming for a $1.75 trillion valuation, will also be monitored.
Furthermore, Globalstar’s shares surged by 10% on reports of potential acquisition talks with Amazon for the low-earth-orbit communication satellites company. Gas prices in Canada continued to rise, with the average national retail price per liter hitting $1.80, and prices in various cities showing increases, including Vancouver at $2.14, Montreal at $1.95, Toronto at $1.82, and Calgary at $1.70.
The ongoing fluctuations in the market and geopolitical tensions underscore the volatility and uncertainty facing investors in the current economic landscape.