Stan Choe
Uncertainty is weighing on Wall Street about when the war with Iran could end, and stocks are falling as oil prices rise.
The S&P 500 sank 1.2 per cent and more than erased its gain from the day before. The Dow Jones Industrial Average was down 368 points, or 0.8 per cent, as of 1:37 p.m. Eastern time, and the Nasdaq composite was 1.6 per cent lower.
The Australian sharemarket is set to fall, with futures at 5.07am AEDT pointing to a fall of 78 points, or 0.9 per cent, at the open. The ASX dipped by 0.1 per cent on Thursday. The Australian dollar is weaker at US68.89¢ at 5.25am AEDT.
Stock markets fell even more sharply across much of Asia and Europe. They’re the latest flip-flops for financial markets in a week that began with President Donald Trump’s announcement of productive talks about ending the war. That led to Iran’s public dismissal of a US ceasefire proposal, while Iran issued its own plan, which includes reparations for the war.
On Thursday, the fighting continued, and thousands more US troops neared the region. Iran, meanwhile, tightened its grip on the crucial Strait of Hormuz. The narrow waterway typically sees a fifth of the world’s oil exit the Persian Gulf through it to reach customers worldwide, and blockages there have sent oil prices near $US120 per barrel at times.
A barrel of Brent crude oil climbed 4.8 per cent to $US101.94 as hopes dimmed for a potential return to normal for the strait. That’s up from roughly $US70 before the war began. Benchmark US crude rose 5 per cent to $US94.86 per barrel.
“They better get serious soon, before it is too late,” Trump said on his social media network about Iran’s negotiators, “because once that happens, there is NO TURNING BACK, and it won’t be pretty!”
The rise in oil prices worsened worries about high inflation and sent Treasury yields higher in the bond market.
The yield on the 10-year Treasury climbed to 4.40 per cent from 4.33 per cent late Wednesday and from just 3.97 per cent before the war started. That leap has already sent rates higher for mortgages and other kinds of loans for US households and businesses, which slows the economy.
A report on Thursday morning said slightly more US workers filed for unemployment benefits last week, though the number is still low compared with historical figures.
A slowing job market would typically encourage the Federal Reserve to cut interest rates to juice the economy. But hopes have cratered on Wall Street for a possible cut to interest rates this year, even though traders came into 2026 forecasting several. That’s because lower interest rates carry the risk of worsening inflation, and the spike in oil prices has heightened those worries.
On Wall Street, Meta Platforms and Alphabet were two of the heaviest weights on the market.
Meta Platforms fell 7.2 per cent, and Alphabet sank 2.7 per cent after each had held relatively steady the day before, when a jury found Instagram and YouTube liable in a landmark social-media addiction trial.
The financial penalties were small compared with the companies’ vast profits, but it could herald a watershed moment that invites more lawsuits.
Commercial Metals fell 2.8 per cent after the maker of steel rebar and other products reported a weaker profit for the latest quarter than analysts expected. CEO Peter Matt said bad weather hurt its North American operations during the quarter, but underlying market conditions looked favourable.
On the winning side of Wall Street were oil and natural as companies, which benefited from a resumption of rising energy prices. ConocoPhillips climbed 3.4 per cent, and Chevron added 1.8 per cent.
In stock markets abroad, Germany’s DAX lost 1.5 per cent, Hong Kong’s Hang Seng sank 1.9 per cent and South Korea’s Kospi dropped 3.2 per cent. Japan’s Nikkei 225 had one of the world’s milder losses, at 0.3 per cent.
