US Stock Markets Retreat as Geopolitical Fears and Oil Price Surge Dampen Sentiment
US stock markets experienced a significant downturn on Thursday, reversing gains from the previous session, as investors grew cautious amid escalating geopolitical tensions and a sharp rise in crude oil prices. The selloff highlighted concerns over potential inflationary pressures and disruptions to global energy supplies.
Major Indices See Broad Declines
The Dow Jones Industrial Average plummeted by 801 points, or 1.6 per cent, with notable losses in stocks such as Caterpillar and Goldman Sachs contributing to the decline. Similarly, the S&P 500 index fell by 0.9 per cent, while the Nasdaq Composite dropped 0.6 per cent, reflecting a broad-based retreat across sectors.
Oil Prices Spike on Middle East Developments
Crude oil prices surged to their highest levels since June 2025, driven by reports of Iran striking an oil tanker with a missile. US West Texas Intermediate crude futures jumped 6 per cent to trade above $79 per barrel, and international benchmark Brent crude futures rose approximately 3 per cent to more than $84 per barrel. This spike followed a period of stabilization in the previous trading session, reigniting fears of prolonged supply disruptions.
Investors are particularly worried that ongoing tensions, including potential disruptions to shipping through the Strait of Hormuz—a critical global energy corridor—could push oil prices toward $100 per barrel. Such a scenario could complicate the Federal Reserve's efforts to control inflation while considering interest-rate cuts.
Market Volatility and Sector Performance
The CBOE volatility index (VIX), a key gauge of market fear, increased by 0.9 points to 22.08, indicating heightened investor anxiety. Among sectors, healthcare led the declines on the S&P 500, falling 1.6 per cent, while the energy index gained 0.7 per cent, with shares of ConocoPhillips and Valero Energy rising about 2 per cent each.
Travel and tourism stocks, sensitive to fuel costs, faced pressure, with Delta Air Lines slipping 3.3 per cent and Royal Caribbean Cruises declining 0.6 per cent. In contrast, some travel booking companies rallied sharply; Booking Holdings jumped 11 per cent and Expedia surged 8 per cent after reports that OpenAI was scaling back on-platform shopping checkout plans for ChatGPT, easing concerns about disruption to online marketplace businesses.
Mixed Performance in Tech and Chip Stocks
Technology and semiconductor stocks showed mixed results. Nvidia edged down 0.3 per cent, while Marvell Technology gained 1.3 per cent. Broadcom shares rose 2.9 per cent after the chip designer projected that its artificial intelligence chip revenue could exceed $100 billion next year. Additionally, Trade Desk surged 22.5 per cent following reports of early discussions with OpenAI regarding advertisement sales.
Federal Reserve and Economic Data in Focus
According to data compiled by LSEG, investors are increasingly expecting the Federal Reserve to delay a 25-basis-point interest rate cut to September from the previously anticipated July timeline. Adam Sarhan, chief executive of 50 Park Investments, noted via Reuters that if energy prices remain high, inflation could climb again, forcing the Fed to reconsider its plans.
Economic data released on Thursday showed the number of Americans filing new applications for unemployment benefits remained unchanged last week. Investors are also awaiting remarks from Federal Reserve Vice Chair Michelle Bowman and the closely watched non-farm payrolls report due on Friday.
Market Breadth and Weekly Outlook
On the New York Stock Exchange, declining stocks outnumbered advancers by a ratio of 2.48-to-1, while on the Nasdaq, the ratio stood at 1.63-to-1. The S&P 500 recorded four new 52-week highs and two new lows, and the Nasdaq Composite registered 17 new highs and 33 new lows.
Despite the selloff, US markets have performed relatively better than European and Asian counterparts this week, largely supported by a rebound in technology stocks. The tech-led recovery in the previous session helped the Nasdaq erase its weekly losses, putting the index on track to end the week in positive territory if gains hold through Friday.
