A disappointing payrolls report fueled concerns that the U.S. economy may cool as geopolitical tensions in the Middle East push energy costs up sharply. The mix threatens to buck at the Federal Reserve, complicating the path to rate cuts and rekindling concerns about new inflationary pressures.
“Now it looks like the conflict is going to last longer than many expected, and oil prices are rising as a result,” said Christina Hooper, market strategist at Maine Group Financial in New York. “It raises the question of whether the Fed will even be able to cut rates.”
The Dow Jones Industrial Average fell 0.95% to 47,501.55 points, posting its biggest weekly percentage drop since early April 2025.
The S&P 500 lost 1.33% to 6,740.00 points and had its worst week since mid-October. The Russell 2000 posted its steepest weekly decline since early August.
The Nasdaq Composite fell 1.59% to 22,387.68.
Oil prices rose due to the US-Israeli military attack on Iran, which blocked shipping through the Strait of Hormuz, and Qatar warned that oil prices could rise to $150 a barrel. U.S. crude futures rose more than 12% on Friday, above $90 a barrel, while international Brent rose about 8.5% to $92 a barrel.
“We’re getting closer to $100 a barrel oil every day, and that’s caused a lot of volatility and anxiety,” said Michael Irwin, chief investment strategist at State Street Investment Management.
The Cboe Volatility Index, Wall Street’s most watched gauge of investor anxiety, rose 5.74 points to 29.49, its highest close since April 2022.
Rising oil prices have led to expectations of higher input costs and pressure on corporate profits, increasing the likelihood of poor credit conditions, which are generally negative for lenders.
The S&P 500 Banks Index, which tracks the largest U.S. bank stocks within the S&P 500, fell 2.03%.
BlackRock fell 7.1% on the decision to limit withdrawals from the giant private credit fund.
Lender Western Alliance fell 8.4% after it was tied to auto parts supplier First Brands Group in bankruptcy for failing to pay debts to Jefferies. Jefferies fell 13.5%.
Signs of a weakening U.S. labor market came amid a strike by health care workers and severe winter weather. The unemployment rate rose to 4.4%.
Travel stocks lagged behind as fuel costs rose, with the S&P Passenger Airlines sub-index, which tracks airline stocks, falling 4.07%.
S&P energy stocks rose 0.13% on the prospect that higher energy costs will bring stronger earnings.
Safe-haven asset gold rose 1.83%, while bitcoin fell 4.30%.
Among other stocks, chip company Marvell Technologies closed 18.4% higher after forecasting better-than-expected fiscal 2028 earnings.
U.S. trading volume was 19.95 billion shares, compared to the 17.82 billion average for the full session over the past 20 trading days.
