US stock markets faced significant volatility on Thursday, grappling with geopolitical tensions and fluctuating energy prices. Despite initial losses, stocks managed to recover partly after reports that Iran was in the process of drafting a protocol with Oman to oversee traffic through the critical Strait of Hormuz. This development momentarily eased investor fears and sparked a reversal in market trends.
The Dow Jones Industrial Average fell 0.1% after it initially dropped more than 1%. The S&P 500 and the Nasdaq Composite both managed marginal gains, ending the day up by 0.1%. The early-day drop was exacerbated by President Trump’s combative rhetoric, where he pledged to “hit Iran hard” in an address that left the timeline for US military involvement unclear. The speech indicated the potential for escalation in military operations, while hinting at a withdrawal timeline of two to three weeks.
For weeks, escalating tensions surrounding the US-Israeli conflict with Iran have weighed heavily on global markets. The Strait of Hormuz, through which approximately 20% of the world’s oil supply passes, has been a focal point for energy traders. Reports from Iran’s state media regarding a collaborative protocol with Oman provided a glimmer of hope for investors, leading to a slight uptick in stock prices. Brent crude oil prices have increased by about 50% since the onset of the conflict in late February, although a temporary dip earlier in the week provided some relief.
Following Trump’s remarks, US benchmark West Texas Intermediate (WTI) crude oil surged by over 11%, trading above $111 a barrel, while Brent crude increased by 6%, surpassing $108. Thursday marked the final trading session of a holiday-shortened week, with initial jobless claims data revealing a drop of 9,000 to 202,000 for the week ending March 28, ahead of the March jobs report scheduled for release on Friday.
In the tech sector, SpaceX is reportedly targeting a $2 trillion valuation for its upcoming IPO, a significant increase from the previously anticipated $1.75 trillion. The buzz surrounding the IPO has drawn interest from investors, potentially positioning SpaceX among the world’s most valuable companies upon going public.
As stocks attempted to navigate through the day’s turbulence, airline shares faltered due to rising oil prices, with major carriers such as American Airlines and United Airlines taking substantial hits. Jet fuel prices have more than doubled in the past month, driven by the conflict in the Middle East, exacerbating profit margins for airlines.
The demand for safe-haven assets like gold diminished, with prices dropping over 2% amid rising oil costs and inflation concerns. Analysts noted that expectations of prolonged inflation and higher interest rates were affecting gold and silver prices negatively.
In correlation, mortgage rates have continued to climb, rising for the fifth straight week above 6%, as home loan applications dropped by more than 10% once again.
In a separate development, Ford reported a 9% year-over-year decline in Q1 sales, prompting a drop in its stock. The company’s F-series trucks, the best-selling vehicles in the U.S., saw sales decline by 16%.
Overall, the day closed with mixed results as traders absorbed the impacts of international tensions and economic data ahead of the extended weekend, reflecting an ongoing uncertainty in the markets.
