Dow tumbles by more than 1,100 points as Iran conflict spills beyond the Middle East
By John Towfighi, CNN
New York (CNN) — US stocks extended losses Thursday afternoon as concerns about a prolonged war with Iran continued to push oil prices higher.
The Dow tumbled 1,150 points, or 2.36%. The S&P 500 fell 1.42% and the tech-heavy Nasdaq dropped 1.26%.
Oil prices traded at their highest level since mid-2024. US crude oil prices jumped 8.5%, to just over $81 per barrel. Brent crude, the international benchmark, climbed 4.8%, to $85.30 per barrel.
US natural gas and diesel futures rose 4% and 10%, respectively. Higher energy prices could stoke inflation, complicating the outlook for the Federal Reserve and posing trouble for stocks.
“There remains a high level of uncertainty over the potential length of the conflict and scale of disruption to global energy supplies,” Lee Hardman, senior currency economist at MUFG, said in a note.
The war in the Middle East appears to have completely stopped the flow of oil tankers through the crucial Strait of Hormuz as insurers and tankers are unwilling to risk sailing through it during the conflict. Zero oil tankers transited the critical waterway on Wednesday, according to S&P Global Commodities at Sea data shared with CNN.
The key issues for markets are whether transit through the Strait of Hormuz will be able to resume as well as trying to assess the duration of the war, said Rob Haworth, senior investment strategy director at US Bank Asset Management.
“The market has been hoping that this will be short,” Haworth said. “Iran continues to try and expand the sphere of conflict, and that could further dampen risk sentiment if it goes longer and broils more.”
Stocks in Europe were also lower: The region’s benchmark Stoxx 600 index sank 1.29% and Germany’s DAX index fell 1.61%.
The US dollar strengthened against other major currencies, benefiting from investors seeking safe havens. The dollar index is up 1.7% this week.
Treasury yields climbed as investors sold bonds and weighed the potential inflationary impact of higher oil prices. The 10-year Treasury yield hit 4.13%, its highest level in three weeks.
Wall Street’s fear gauge, the VIX, surged 18%. “Fear” was the sentiment driving markets, according to CNN’s Fear and Greed Index.
“We’ve seen no signs of de-escalation yet, and oil prices are continuing to move higher,” Jim Reid, global head of macro research at Deutsche Bank, said in a note.
A popular exchange-traded fund tracking the airline industry dropped 5% and was set for its worst day since April.
This is a developing story and will be updated.
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CNN’s Matt Egan contributed reporting.
