Stocks sank on Wall Street on Thursday after oil prices rose to their highest level since the summer of 2024 due to war with Iran.
The S&P 500 fell 0.6% and erased a small gain for the year so far. The Dow Jones Industrial Average briefly fell more than 1,100 points before closing at 784, or a 1.6% loss. The Nasdaq composite fell 0.3%.
The S&P/TSX composite index shed 332.89 points to 33,609.97.
The losses came as financial markets around the world followed the cue from oil prices. A prolonged surge could slow the global economy, exhaust households’ ability to spend, and raise concerns that interest rates could rise.
The price of a barrel of benchmark US crude rose 8.5% on Thursday to settle at $81.01 per barrel. Brent crude, the international standard, rose 4.9% to $85.41 a barrel and is near its highest price since 2024.
Oil prices gave back some gains later in the day, which helped US stocks moderate their losses in late trade. But worries remain about how long oil production will be disrupted due to an escalating war with Iran.
US gasoline pump prices have already jumped because of them. The average price for a gallon is $3.25, according to Auto Club AAA, up 9% from $2.98 the week before.
US President Donald Trump said on Thursday he was not concerned about rising gas prices, telling Reuters in an exclusive interview that US military action was his priority.
“I’m not concerned about that,” he said when asked about higher prices at the pump. “Once it’s over they’ll go down pretty quickly, and if they go up, they’ll go up, but that’s a lot more important than gasoline prices going up a little bit.”
Trump later said further action to reduce pressure on oil was imminent.
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“Oil appears to be pretty much stable,” he said at an unrelated event at the White House. “We had very little of it, but I had to take this short cut,” he said, referring to the decision to strike Iran.
A senior White House official told reporters that the US Treasury Department is expected to announce on Thursday a plan to combat rising energy prices, including potential action involving the oil futures market.
If oil prices rise further, to $100 per barrel and stay there, some analysts and investors say the global economy will be too much to bear. Uncertainty about what will happen has caused frenzied swings across financial markets this week, sometimes for hours.
Much depends on what happens with the Strait of Hormuz. Roughly one-fifth of the world’s oil travels through the narrow waterway that normally runs along Iran’s coast.
To be sure, the US stock market has a history of bouncing back relatively quickly after conflicts in the Middle East and elsewhere, as long as oil prices don’t jump too high for too long. Many professional investors advise patience and riding through market fluctuations.
According to Scott Wren, senior global market strategist at Wells Fargo Investment Institute, “While further escalation remains a risk, we think the overarching result is an increase in market risk aversion.”
Despite its sharp swings, the S&P 500 is down just 0.7% for the week so far, as gains in big tech stocks and oil producers have helped blunt losses in the rest of the market.
Shares of airline companies fell on Thursday again amid some of the US market’s worst losses. High oil prices are driving up their already large fuel bills, while the war has left hundreds of thousands of travelers stranded across the Middle East.
American Airlines lost 5.4%, United Airlines fell 5% and Delta Airlines fell 3.9%.
Meanwhile, stocks of smaller companies took a heavy hit. That’s typical when worries about the strength of the economy and rising interest rates are growing. The Russell 2000 index of small stocks fell a market-leading 1.9%.
Wall Street’s collapse would have been worse without Broadcom. The chip company’s stock rose 4.8% in the latest quarter after reporting stronger-than-expected profit and revenue. It’s one of Wall Street’s most impressive stocks because it’s the largest by total value and benefited from a 74% jump in revenue for AI chips, CEO Hock Tan said.
The S&P 500 fell 38.79 points to 6,830.71. The Dow Jones Industrial Average fell 784.67 to 47,954.74 and the Nasdaq Composite fell 58.50 to 22,748.99.
In the bond market, Treasury yields rose as rising oil prices put more pressure on inflation, preventing the Federal Reserve from cutting interest rates.
The yield on the 10-year Treasury rose to 4.13% from 4.09% late Wednesday and from just 3.97% before the war with Iran began.
The Fed can keep interest rates high to keep a lid on inflation. But higher interest rates make it more expensive for U.S. households and companies to borrow money, which weighs on the economy.
The central bank has indicated that it plans to resume its cuts to interest rates later this year in hopes of stimulating the job market and the economy. Because of the war and high oil prices, traders have pushed their forecasts further into the summer when the Fed will start cutting rates again.
In stock markets abroad, indices in Asia recovered after historic losses the previous day. South Korea’s Kospi rose 9.6% to recover from its 12.1% drop since Wednesday, its worst decline yet.
But indices in Europe fell as oil prices began to accelerate. France’s CAC 40 fell 1.5%, and Germany’s DAX lost 1.6%.
AP writers Kim Tong-hyung and Elaine Kurtenbach contributed. Additional files from Reuters.
© 2026 The Canadian Press
(tags to translate)Iran
