Wall Street stocks plunged Thursday as oil prices reached their highest point since summer 2024, fueled by the conflict with Iran. The S&P 500 erased its yearly gains, and the Dow Jones Industrial Average saw a significant drop. Global markets are mirroring oil price movements, raising concerns of a prolonged surge grinding down the global economy and impacting consumer spending.
Benchmark U.S. crude oil rose 8.5% to $81.01 a barrel, with Brent crude also climbing. While oil prices moderated later in the day, worries persist about production disruptions. U.S. gasoline prices have already increased, with the national average now at $3.25 per gallon.
President Trump stated he is not concerned about rising gas prices, prioritizing military operations and expecting prices to drop post-conflict. A White House official indicated potential measures to combat rising energy prices.
Analysts warn that sustained oil prices above $100 per barrel could severely impact the global economy. Market volatility is high, with significant swings occurring frequently.
The Strait of Hormuz, through which about a fifth of the world's oil travels, remains a critical point of concern.
Despite market turbulence, some investors suggest patience, noting the stock market's historical resilience following Middle East conflicts, provided oil prices do not remain excessively high. Airlines and smaller companies have been particularly hard-hit due to increased fuel costs and economic uncertainty, though companies like Broadcom, benefiting from AI chip revenue, have seen stock increases.
The bond market saw Treasury yields climb, potentially delaying Federal Reserve interest rate cuts due to inflation pressures. Traders have pushed back their expectations for rate cuts to later in the summer.