Expansion of the conflict to more countries fed fears of disruption in the Strait of Hormuz, a critical energy choke point, where missile and drone threats have drastically reduced tanker traffic.
This lifted US crude prices 8.5 percent to US$81 per barrel, the highest since July 2024. Global benchmark Brent crude rose 4.9 percent to US$85.41. Traders worry a prolonged interruption could feed inflation and slow economic growth.
“Look at oil today, it tells you everything you need to know about why the stock market’s down,” said Michael Antonelli, market strategist at Baird Private Wealth Management. “The market is really trying to grapple with how long this conflict will last.”
The Dow fell 1.6 percent, to 47,954, the S&P 500 fell 0.6 percent, to 6,830, while the Nasdaq fell 0.3 percent, to 22,748.
The S&P 500 indexes that track performance of major US companies in the industrials, materials and healthcare sectors fell more than 2 percent each. The passenger airlines sub-sector tumbled 5.4 percent, with Southwest Airlines Co down 6.9 percent.
Limiting losses were energy and technology stocks. The S&P 500 index which tracks the performance of major US energy companies rose 0.6 percent with the prospect of higher revenue on energy prices. Chevron gained 3.9 percent.
S&P technology stocks rose 0.4 percent. Shares of chip designer Broadcom rose 4.8 percent after it projected its artificial intelligence chip revenue would exceed US$100 billion next year.
With the US-Israeli air war against Iran raging, Wall Street has outperformed its European and Asian counterparts this week, aided primarily by technology stocks that bore the brunt of February’s selloff. The Nasdaq is 0.36 percent up since the conflict started.
Any signs that crude prices could hit US$100 a barrel would be worrisome, and investors were on the lookout for reports that the conflict could be nearing its end.
Data showed the number of Americans filing new applications for unemployment benefits was unchanged last week. (Reuters)
Edited by Cecil Wong
