All three major indexes posted weekly losses and turned negative for the year after a February jobs report showing 92,000 job losses collided with oil prices above $90 a barrel
U.S. stocks closed lower Today, capping a week in which rising oil prices and a deteriorating labor market combined to push all three major indexes into negative territory for the year. The S&P 500 fell 1.3% on the day and posted a weekly loss of 2%. The Nasdaq Composite dropped 1.6% Friday and lost 1.2% for the week. The Dow Jones Industrial Average declined nearly 1% Friday and finished the week down 3%.
The week’s damage began Thursday, when oil prices surged after Iran struck an oil tanker with a missile, sending West Texas Intermediate crude above $80 per barrel for the first time since July 2024. The Dow briefly fell more than 1,100 points before closing down 784 points, or 1.6%, at 47,954.74. The S&P 500 dropped 0.6% to 6,830.71 and the Nasdaq slipped 0.3% to 22,748.99.
Oil posts its biggest weekly gain since 1985 affects stock
Today, the scale of the oil move had become historic. WTI crude gained more than 38% from the close of trading the previous Friday, briefly crossing $92 per barrel before settling at $91.27. Brent crude, the international benchmark, rose roughly 30% on the week to trade above $94 per barrel, its largest weekly gain since April 2020. Both benchmarks are trading at prices not seen since at least 2023 and 2024 respectively.
The Strait of Hormuz, through which roughly 20% of the world’s oil supply typically passes, remained effectively closed to tanker traffic as the conflict between the U.S., Israel and Iran entered its second week. Analysts at Macquarie warned that without a rapid cessation of hostilities, the crude market could begin to break down within days rather than weeks. Gulf exporters face the prospect of shutting off production as storage capacity fills up with oil that cannot be moved.
Gas prices at U.S. pumps have already responded. The national average climbed to $3.25 per gallon, up 9% from $2.98 the week prior, according to AAA. If oil reaches $100 per barrel and holds there, some analysts believe the pressure on the global economy would become difficult to absorb.
The jobs report added a second shock to an already stressed market
Friday’s selloff was amplified by the February jobs report, which showed nonfarm payrolls fell by 92,000, a figure that widely missed the consensus expectation of 55,000 jobs added. The unemployment rate rose to 4.4%. The combination of a weakening labor market and surging energy costs pushed stagflation fears to the front of the conversation on Wall Street, a scenario that leaves the Federal Reserve with very little room to maneuver for the stock market.
The Fed had been expected to resume interest rate cuts later this year to support the economy and job market. Rising oil prices complicate that path directly. Higher energy costs feed through to broader inflation, giving the central bank reason to hold rates steady even as growth slows. Treasury yields reflected that tension. The 10-year yield rose to 4.13% by Thursday’s close, up from 3.97% before the conflict began.
Where the damage was concentrated and what it means for the stock market
The sharpest losses of the week fell on industries most exposed to an economic slowdown. Airlines took repeated hits as fuel costs climbed and passengers remained stranded across the Middle East. American Airlines lost 5.4% Thursday, United Airlines fell 5% and Delta Air Lines dropped 3.9%. Industrial and materials stocks also led the declines, with Caterpillar down 4.4%, GE Aerospace off 3.5% and 3M losing 3.3%. The Russell 2000 index of smaller companies fell 1.9%, consistent with the pattern seen when recession concerns build.
Not everything fell. Berkshire Hathaway gained more than 2% after disclosing it had resumed buying back its own shares for the first time since 2024, with CEO Greg Abel purchasing $15 million worth of stock personally. Broadcom rose 4.8% after reporting stronger than expected quarterly earnings, with its chief executive citing a 74% jump in revenue from AI-related chips. Oil producers broadly gained as the commodity they sell kept rising.