New York
US stocks were slightly lower Thursday in volatile trading as investors monitored developments in the Middle East and digested President Donald Trump’s pledge to intensify the war with Iran.
The Dow was down 93 points, or 0.2%, paring losses after dropping by more than 600 points earlier. The S&P 500 and Nasdaq were down 0.1% and 0.2%, respectively, after each dropping by more than 1%.
Stocks opened lower Thursday before regaining some ground after reports from Iran’s semi-official news agencies that Iran and Oman are drafting a protocol to facilitate traffic through the Strait of Hormuz.
Stocks had rallied earlier this week, posting their best day since May on Tuesday as optimism rose that the United States might make an effort to end the war with Iran.
But volatility roared back after Trump, in an April 1 evening address to the nation, revealed no clear exit strategy and no solution to the effective closure of the Strait of Hormuz, which has choked off one-fifth of the global supply of oil.
Investors are concerned that the war will continue to push up global energy costs, leading to higher inflation and slower economic growth.
“The fog of war remains thick and crude flows are still too low to sound the all-clear,” Felix Vezina-Poirier, chief strategist at BCA Research, said in a note.
Trump said the war would drag on for at least two to three more weeks and even signaled an escalation in the conflict, with the United States potentially targeting Iran’s oil facilities.
Trump’s comments led to another spike in oil prices: Brent crude, the global oil benchmark, rose 5.3% Thursday, to $106.52 a barrel. WTI, the US benchmark, climbed 8.75% to $108.88 a barrel.
Stocks in Asia and Europe were lower: Japan’s Nikkei 225 sank 2.38%, and Germany’s DAX index dropped 1%.
US gas prices are now up 37% since the start of the war, with the average per-gallon price reaching $4.08 in the latest reading from AAA. Americans are feeling the pain of higher prices, with some families facing stark choices due to the increase in cost of everything from groceries to air travel.
Higher oil prices and uncertainty about the length of the war are rippling through the economy via higher energy costs. And it’s jolting the stock market, too: The Dow and S&P 500 just posted their worst quarterly performances since September 2022. The Nasdaq last month had its worst month in a year.
“Markets will only recover in a true and sustainable way once global energy markets begin to normalize,” Kyle Rodda, senior financial market analyst at Capital.com, said in a note.
In the bond market, yields fell Thursday after initially rising. Yields are still higher compared to the start of the war, translating into higher borrowing costs in the economy. Investors have sold bonds, pushing yields up, to account for potential inflation and the prospect of the Federal Reserve holding interests steady for longer.
Thursday marks the last US trading day of the week, with markets closed Friday in observance of the Good Friday holiday.
This is a developing story and will be updated.
