Two tankers burned in Iraqi waters, and Wall Street paid for it. The Dow Jones Industrial Average fell 586.92 points, or 1.24%, to 46,830.35 on Thursday. The S&P 500 dropped 77.52 points (1.14%) to 6,698.27, and the Nasdaq lost 350.14 points (1.54%) to 22,366.00.
Crude jumped after the tanker fires, which looked like the work of Iranian strikes. They were part of wider attacks on oil and transport facilities across the Middle East. Iraq shut its oil port terminals after the strikes, CNBC TV18 reported. Brent futures rose about 7% to near $99 a barrel, and West Texas Intermediate gained roughly 7% to trade around $94. Crude briefly climbed above $100 before easing.
Hormuz stays in play
Iran’s newly appointed Supreme Leader, Mojtaba Khamenei, said the Strait of Hormuz should stay closed as a lever against Iran’s adversaries. Shipping traffic through the region has slowed sharply. Energy Secretary Chris Wright told CNBC the US Navy is “not ready” to escort oil tankers through the strait, though he said that could change by the end of the month.
The International Energy Agency said the world faces the biggest oil supply disruption on record. Global markets have been rattled all month by the US-Israeli war with Iran, which has choked oil and gas supplies and pushed crude sharply higher.
Winners and losers
Airlines took the worst of it. S&P 500 airline stocks, which are highly sensitive to fuel costs, fell 3.4% and are on track for their biggest monthly losses in a year. Norwegian and Royal Caribbean each slid more than 2.5%. Energy producers went the other way: Occidental gained 3.3% and ConocoPhillips rose more than 1.4%.
Chemical makers also climbed. LyondellBasell rose 3.7% and Dow 5.7% after Citigroup upgraded them, pointing to new export opportunities as the Middle East supply chain is disrupted. Bumble jumped 37% after fourth-quarter revenue beat estimates. Dollar General fell 7.3% on a forecast of annual comparable sales below estimates.
Rates and credit
The war is also complicating central banks’ plans to ease policy. Goldman Sachs moved its forecast for the Federal Reserve’s next rate cut to September, from June. Money market futures now show traders expecting a single quarter-point cut by December, down from two before the conflict began.
Labor data was steadier. Initial jobless claims came in at 213,000 for the week ended March 7, below economists’ expectations. Markets widely expect the Fed to hold rates at its meeting next week, and the PCE price index, the Fed’s preferred inflation gauge, is due Friday.
Investors are also watching the roughly $2 trillion private credit market after a string of credit problems in recent months. Swiss private equity firm Partners Group warned that default rates could double within a few years. “The question is how many people have this on their books. Where is it being marked? Are they derivatives? We need to keep a very close eye on that as things unravel quickly,” said Joe Saluzzi, co-head of equity trading at Themis Trading.
Washington separately said it was opening two new trade investigations, one into excess industrial capacity in 16 major trading partners and one into forced labor, to rebuild tariff pressure.
The CBOE volatility index rose 2.53 points to 26.77, and the Russell small-cap index lost 1.8%. Decliners beat advancers by 3.44 to 1 on the NYSE and 3.07 to 1 on the Nasdaq.
Sources
- US stocks today: Dow Jones plunges 500 points, S&P, Nasdaq over 1% as Middle East tensions push oil prices up
- Dow Jones drops 500 points, S&P 500 and Nasdaq slide as West Asia tensions lift oil – CNBC TV18
