Stocks on Wall Street experienced a decline on Thursday as oil prices surged to their highest level since the summer of 2024 amid the ongoing U.S.-Israeli conflict with Iran. The S&P 500 dropped 0.6%, wiping out its year-to-date gains, while the Dow Jones Industrial Average briefly plummeted over 1,100 points before ending the day down 1.6% or 784 points. The Nasdaq composite also saw a slight decrease of 0.3%.
Global financial markets continued to be influenced by the sharp rise in oil prices, raising concerns about the potential long-term impact on the global economy, consumer spending capacity, and interest rate hikes. The price of benchmark U.S. crude surged by 8.5% to $81.01 per barrel, while Brent crude, the international standard, rose by 4.9% to $85.41 per barrel, nearing its highest level since 2024.
Although oil prices retraced some of their gains later in the day, worries persist about the duration of disruptions in oil production due to the escalating conflict with Iran. This uncertainty has led to fluctuations in financial markets, with concerns over the sustainability of the global economy if oil prices reach $100 per barrel and remain at that level.
The U.S. stock market has historically rebounded swiftly following geopolitical conflicts, provided that oil prices do not escalate significantly for an extended period. Despite the market volatility, the S&P 500 saw a modest 0.7% decline for the week, with gains in Big Tech and oil companies offsetting losses in other sectors.
Airlines stocks were among the hardest hit on Thursday, facing increased fuel costs due to higher oil prices and disruptions in travel amid the conflict. American Airlines, United Airlines, and Delta Air Lines all experienced notable declines. Smaller company stocks also suffered, reflecting concerns about economic strength and rising interest rates, with the Russell 2000 index dropping by 1.9%.
In global markets, Asian indexes rebounded after significant losses, with South Korea’s Kospi recovering much of its previous day’s plunge. However, European markets saw declines as oil prices surged, with France’s CAC 40 and Germany’s DAX both registering losses.