The US stock market opened on Friday with a significant selloff, sending the Dow Jones Industrial Average into correction territory for a brief period, as a new survey indicated a sharp decline in US consumer sentiment for March. Within the first hour of trading, the Dow dropped more than 400 points, briefly pushing it below the threshold that defines a correction.
Further complicating the economic landscape, oil prices surged, with Brent crude, the global benchmark, reaching $110 a barrel. This volatility follows a challenging week for US stocks, with Thursday marking the largest decline since the onset of the US-Israel conflict surrounding Iran. By the close of trading on Thursday, the tech-heavy Nasdaq index entered correction territory as well, falling more than 10% from its recent peak.
Despite efforts to stabilize the situation, including an announcement from former President Donald Trump that he would extend a pause on Iranian energy strikes, market confidence remains shaky. Trump has reassured that both oil prices and the stock market will stabilize once the hostilities cease. However, skepticism persists among investors.
Adding to the turmoil, a recent survey conducted by the University of Michigan revealed widespread declines in consumer sentiment across various demographics, including age, political affiliation, and income levels. The survey indicated a 6% drop in sentiment for March, marking the lowest levels since December 2025, as Americans grapple with the economic repercussions of the ongoing conflict in Iran.
Interestingly, consumers in the middle to higher income brackets experienced particularly significant drops in confidence. Conducted between February 17 and March 23, the survey revealed that inflation expectations for the year also climbed from 3.4% to 3.8%, representing the most considerable month-to-month increase since last April during Trump’s announcement of tariff plans. Short-term economic expectations plummeted by 14%, although long-term expectations saw a less dramatic decline.
Joanne Hsu, the director of the Surveys of Consumers, commented on the findings, noting that while consumers may not anticipate recent adverse developments to persist indefinitely, such perspectives could shift if the Iranian conflict continues or if rising energy prices contribute to inflation.
These consumer expectations align with economic forecasts indicating that the conflict is likely to exacerbate inflation. The Organization for Economic Cooperation and Development (OECD) revised its global GDP growth projections downward, citing significant uncertainty surrounding global demand due to the conflict in the Middle East.
The OECD cautioned that the ongoing situation carries both human and economic costs for the countries involved and poses a resilience test for the global economy. Disruptions in shipments through the Strait of Hormuz and damage to energy infrastructure have triggered a surge in energy prices, further straining the global supply of energy and essential commodities like fertilizers. The organization also noted that the Middle East conflict is expected to inflict more damage on the UK economy compared to other industrialized nations, indicating broader implications on the international economic landscape.
