U.S. stocks fell on Thursday, as Iranian strikes on two oil tankers sent crude prices surging toward $100 per barrel, further exacerbating inflation fears and sending investors fleeing equity markets. All three major U.S. stock indexes slid more than 1.5% in a broad selloff, with everything but energy and some defensive stocks suffering steep percentage losses. The S&P 500 notched its biggest three-day percentage drop in a month.
The Dow Jones Industrial Average fell 739.42 points, or 1.56%, to 46,677.85, the S&P 500 lost 103.22 points, or 1.52%, to 6,672.58 and the Nasdaq Composite lost 404.15 points, or 1.78%, to 22,311.98.
Investors await key U.S. inflation data. Energy sector gained best rising 1% while industrials sliding 2.5%, notched the steepest percentage loss. Agricultural fertilizer firms, which also rely on shipments through the Strait of Hormuz, advanced on surging prices. The S&P Fertilizer and Agricultural Chemicals index jumped 4.9%. Chemical companies Lyondell Basell and Dow advanced 10.3% and 9.3%, respectively, following a Citigroup upgrade on new export opportunities arising from supply chain disruptions in the Middle East. On Friday, a raft of economic indicators is expected, including consumer sentiment, durable goods, job openings/labor turnover, and the broad-ranging personal consumption expenditures report.
Asia-Pacific markets opened lower as oil prices soared on renewed fears that a prolonged conflict in the Middle East could further crimp energy supplies, stoking fears of a global economic downturn. Japan’s Nikkei 225 dropped 2% while the broad-based Topix fell 1.4%. South Korea’s blue chip Kospi slumped almost 3% and the small-cap Kosdaq shed nearly 2%. Hong Kong’s Hang Seng index tumbled 0.2% while mainland China’s CSI 300 index inched 0.3% higher. European stocks finished lower on Thursday as investors monitored the Iran war and volatile global oil prices. The pan-European Stoxx 600 finished the session about 0.7% lower, with underlying sectors painting a mixed picture.
Treasury yields rose on Thursday as investors weighed the latest developments in the U.S.-Iran war and the inflationary risk posed by rising oil prices. The benchmark 10-year Treasury yield was higher by more than 5 bps at 4.26%. The 30-year Treasury bond yield added more than 2 bps to 4.879%. The 2-year Treasury note yield was higher by more than 9 bps, reaching 3.73%.