U.S. stocks extended their declines on Friday, closing out a fifth consecutive week of losses, marking the longest losing streak in almost four years. The S&P 500 dropped by 1.7%, marking its worst week since the onset of the conflict with Iran. The Dow Jones Industrial Average shed 793 points, a 1.7% decrease, and retreated over 10% from its previous record high set the previous month. Meanwhile, the Nasdaq composite slipped by 2.1%.
The Dow’s decline now confirms a correction, defined as a 10% drop from a previous peak, making it the latest major index to enter this territory following the Nasdaq’s correction on the preceding day.
This week, Wall Street witnessed fluctuating stock market movements as optimism and pessimism alternated regarding a potential resolution to the conflict. In contrast, Canada’s primary stock index managed to close marginally higher, buoyed by gains in the basic materials sector. The S&P/TSX composite index concluded with a 73.13-point increase at 31,960.65.
Following a challenging Thursday trading session, U.S. President Donald Trump extended the deadline for Iran’s power plant destruction to April 6, provided oil tankers are allowed to navigate freely through the Strait of Hormuz. Although oil prices momentarily retreated after Trump’s announcement, they resumed their upward trajectory as the day progressed.
Despite Trump’s announcements, the conflict in the Middle East persisted, with Iran showing no signs of backing down and Israel threatening to intensify its assaults. The conflicting statements between the U.S. and Iran during the week left investors disheartened and contributed to market uncertainty.
Oil prices surged, with Brent crude rising by 3.4% to $105.32 per barrel, up significantly from pre-conflict levels. Concerns loom over potential disruptions in oil and gas production in the Persian Gulf, which could lead to widespread inflation and impact various sectors of the global economy.
If the conflict persists until the end of June, analysts predict oil prices could reach a record high of $200 per barrel. On Wall Street, most stocks experienced declines, with technology giants like Amazon, Meta Platforms, and Nvidia among the top losers. Non-essential goods companies also faced significant drops, with Norwegian Cruise Line Holdings, Starbucks, and Chipotle Mexican Grill witnessing sharp declines.
Stock markets in Europe and Asia experienced mixed performances, while Treasury yields fluctuated, rising to 4.48% before retreating. The increase in yields has already led to higher mortgage rates and slowed down economic activities. Bond market disruptions were emphasized as key factors affecting financial markets, with past instances of tariff threats impacting market dynamics.