Wall Street sees worst decline since Iran war began, as Nasdaq falls 10% to record low
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Stocks fell sharply and oil prices rose Thursday as skepticism overshadowed Wall Street’s optimism about a possible end to the US-Israeli war with Iran.
The S&P 500 fell 1.7 percent in its worst day since January and is back on track for a fifth straight week of decline. This was before the war began on 28 February, and would be the longest losing streak in nearly four years.
The Dow Jones Industrial Average fell 469 points, or one percent, and the Nasdaq Composite fell 2.4 percent, down more than 10 percent from its all-time high reached earlier this year. It’s a decline so big that professional investors have given it a name: the “correction.”
Stock markets in much of Asia and Europe also fell similarly. These are the latest flip-flops for financial markets in a week that began with great expectations after US President Donald Trump said there had been meaningful talks about ending the war. But Iran refused direct talks and then rejected the US proposal for a ceasefire delivered through Pakistan.
Fighting continued on Thursday and thousands of US troops moved closer to the area. Meanwhile, Iran has tightened its grip on the vital Strait of Hormuz.
It could create something like a “toll booth” for tankers to transit the narrow waterway, which typically moves a fifth of the world’s oil out of the Persian Gulf to customers around the world.
The price of a barrel of Brent crude rose 4.8 percent to US$101.89 as hopes for a possible return to normal in the strait fell. That’s up from about $70 before the war started. Benchmark US crude rose 4.6 percent to $94.48 a barrel.
Trump softened the threats
“They better get serious soon, before it’s too late,” Trump said of Iran’s negotiators on his social media networks Thursday morning.
Minutes after Wall Street’s trading ended for the day, Trump softened his stance. He said he was postponing his threat to “destroy” Iranian power plants until April 6, to allow more time for negotiations.
“Negotiations are ongoing and, despite inaccurate statements by the fake news media and others, they are going very well.”
After that, oil prices gave back some of their gains and Brent crude fell back to $100 a barrel. Treasury yields also pared their big jump in the bond market.
Higher Treasury yields and bond market disruptions were big factors Trump named a year ago when he backed off his initial threats for global tariffs on “Liberation Day.” The move led critics to charge that Trump always exits, or “TACO”, if financial markets show enough pain.
The yield on the 10-year Treasury rose from 4.33 percent late Wednesday to 4.43 percent on Thursday, up from just 3.97 percent before the war began. That’s a significant jump for the bond market, and it has already sent rates higher for mortgages and other types of loans to American households and businesses, slowing the economy.
Iran flatly rejected US President Donald Trump’s 15-point ceasefire plan and his demand for Iran to accept military defeat. Meanwhile, the Pentagon ordered at least 1,000 air troops to be sent to the area, with thousands of Marines already on their way.
Slightly more U.S. workers filed for unemployment benefits last week, though the number is still low compared to historical data, a report Thursday morning said.
A slowing job market would normally encourage the US Federal Reserve to cut interest rates to stimulate the economy. But expectations on Wall Street for a possible cut in interest rates this year have dimmed, even though traders had many forecasting cuts to 2026. That’s because low interest rates risk worsening inflation, and rising oil prices have heightened those concerns.
Tech stocks fall
On Wall Street, tech stocks had the biggest weighting on the market.
The Meta platform fell eight percent after being relatively stable the previous day, and Alphabet fell 3.4 percent after a jury in Los Angeles found Meta and YouTube liable in a landmark social media addiction trial.
The financial penalty was small compared to the companies’ huge profits, but it could herald a watershed moment that will invite more lawsuits. Other Big Tech stocks also declined, including a 4.2 percent decline for Nvidia and two percent for Amazon. Apple led the way and rose 0.1 percent.
Commercial metals fell 4.7 percent after the maker of steel bars and other products reported weaker-than-expected profit in the latest quarter. CEO Peter Matt said bad weather during the quarter impacted its North American operations, but underlying market conditions looked favorable.
All told, the S&P 500 fell 114.74 points to 6,477.16 and is down 7.2 percent from its all-time high from a few months ago. The Dow Jones Industrial Average fell 469.38 to 45,960.11 and the Nasdaq Composite dropped 521.74 to 21,408.08.
In overseas stock markets, Germany’s DAX fell 1.5 percent, Hong Kong’s Hang Seng fell 1.9 percent and South Korea’s Kospi fell 3.2 percent. Japan’s Nikkei 225 fell 0.3 percent, one of the world’s lightest falls.
