NEW YORK (AP) — The U.S. stock market careened through the manic Monday, turning from sharp early losses to strong gains as worries turned to hope that the war with Iran might not last long. Oil prices have fallen from around $120 a barrel, the highest since 2022, back below $90.
The S&P 500 fell as much as 1.5% in the morning before flipping to a 0.8% gain. The Dow Jones industrial average sank nearly 900 points to rise 239 points, or 0.5%, while the Nasdaq composite climbed 1.4%.
They are the latest after-hours swings to dampen financial markets due to disruptions to the energy industry in the Middle East and uncertainty about high oil prices and how long they will stay there. Markets made their biggest swings in the last hour of Wall Street trading after President Donald Trump told CBS News that he thinks “the war is pretty much done, pretty much.”
This eased concerns that had arisen earlier in the morning, when the price of Brent crude oil, the international standard, briefly reached $119.50. It hasn’t been this expensive since the summer of 2022 when Russia invaded Ukraine.
If oil prices remain too high for too long, household budgets already stretched by high inflation will break under the pressure. At the same time, companies will see their own bills for fuel and for storing goods on their store shelves or in their data warehouses. All of this creates the possibility of a worst-case scenario for the global economy, “stagflation,” where growth stagnates and inflation remains high.
Concerns are particularly focused on the Strait of Hormuz, a narrow waterway off the coast of Iran through which one-fifth of the world’s oil flows every day. Iran had previously threatened to set fire to ships in the strait.
If the strait remains closed for just a few weeks, oil prices will rise to $150 per barrel, according to oil and gas strategists at Macquarie Research.
But oil prices pared their gains during the day, initially on talk that the world’s seven largest economies could coordinate moves to stem the surge. They then quickly fled after CBS News reported that Trump said of Iran, “If you look, they have nothing left. Militarily nothing left.”
Trump also added that when it comes to the Strait of Hormuz, he is “thinking about seizing it,” according to CBS.
Brent crude settled back at $98.96 a barrel in the afternoon before falling below $90. Benchmark US crude oil prices hit $119.48 a barrel in the morning, then fell back to $94.77 and then fell to $85.
Oil prices
