By STAN CHOE AP Business Writer
NEW YORK (AP) — With no clear end in sight, the war with Iran is sending oil prices back to $100 per barrel and stocks sinking worldwide on Thursday.
The S&P 500 fell 1.1% and is returning to big swings following a couple days of relative calm. The Dow Jones Industrial Average was down 588 points, or 1.2%, as of 10 a.m. Eastern time, and the Nasdaq composite was 1.4% lower.
The center of action was again the oil market, where the price of a barrel of Brent crude, the international standard, got as high as $101.59 overnight before pulling back to $99.50, an 8.1% rise. Worries remain high that the war could block the production and transport of oil in the Persian Gulf for a long time, which in turn could cause a debilitating surge of inflation for the global economy.
Iran has escalated its attacks, aimed at generating enough economic pain to pressure the United States and Israel to end the war they began, targeting oil fields and refineries. Iran’s actions have effectively stopped cargo traffic through the narrow Strait of Hormuz, where a fifth of the world’s oil typically sails. That has oil producers cutting production because their crude has nowhere to go.
Countries around the world are trying to make up for that, and the International Energy Agency said Wednesday that its members would release a record amount of crude, 400 million barrels, from their stockpiles built for such emergencies.
But such moves are short-term fixes, and they do not clear the long-term risks. Analysts have said that if the Strait of Hormuz remains closed, oil prices could jump to $150.
To be sure, the U.S. stock market has a history of bouncing back relatively quickly from military conflicts in the Middle East and elsewhere, as long as oil prices don’t stay too high for too long. Even with all the swings up and down of the last couple weeks, many rocking markets hour to hour, the S&P 500 is still just 4% below its all-time high set in January.
What’s made this jump for oil prices so frightening is not only the degree — prices jumped near $120 earlier this week to their highest level since 2022 — but that they’re also occurring during an uncertain time for the economy.
Last month’s report on hiring by U.S. employers was surprisingly weak, which raised worries about a possible worst-case scenario for the economy called “stagflation.” That’s one where economic growth stagnates while inflation remains high, a miserable mix that the Federal Reserve has no good tools to fix.
A more encouraging signal on the economy arrived Thursday. A report said that the number of U.S. workers applying for unemployment benefits inched lower last week. That’s a sign of that layoffs potentially are remaining low around the country.
Dollar General, meanwhile, reported better profit and revenue for the latest quarter than analysts expected. But the retailer with relatively low prices, whose customers often have the least cushion to absorb higher gasoline prices, gave forecasts for revenue this upcoming year that indicated a slowdown in growth. Its stock tumbled 7.8%.
Some of the worst losses on Wall Street again hit companies with already big fuel bills. United Airlines sank 33.7%, and cruise-ship operator Carnival fell 6%.
In stock markets abroad, indexes also fell across Europe and Asia.
Japan’s Nikkei 225 fell 1%, and France’s CAC 40 lost 0.7% for two of the world’s bigger moves.
In the bond market, Treasury yields continued to climb because of upward pressure from rising oil prices. The yield on the 10-year Treasury rose to 4.22% from 4.21% late Wednesday and from just 3.97% before the war started.
Higher yields help make all kinds of borrowing more expensive, such as mortgages for potential U.S. homebuyers and bond offerings for companies looking to expand. They also push down on prices for all kinds of investments, from stocks to crypto.
Because of the spike for oil prices, traders have pushed back forecasts for when the Fed could resume its cuts to interest rates. President Donald Trump has been angrily calling for such cuts, which would give the economy and job market a boost but also potentially worsen inflation.
A barrel of benchmark U.S. crude rose 8.4% to $94.57.
___
AP Business Writers Matt Ott and Elaine Kurtenbach contributed.