U.S. equities continued their decline on Friday as Wall Street wrapped up its fifth consecutive week of losses, marking the longest stretch of decline in almost four years. The S&P 500 dropped by 1.7%, closing out its worst week since the onset of the conflict with Iran. The Dow Jones Industrial Average shed 793 points, or 1.7%, falling over 10% from its recent peak, while the Nasdaq composite declined by 2.1%.
The Dow’s decrease officially placed it in correction territory, defined as a 10% drop from a previous high. Following suit, the Nasdaq had already reached this correction mark the day before.
This week saw a departure from the back-and-forth trading pattern, with the U.S. stock market experiencing daily fluctuations as optimism and pessimism regarding a resolution to the conflict swung. Meanwhile, in Canada, the main stock index closed marginally higher, boosted by gains in the basic materials sector, with the S&P/TSX composite index ending the day up 73.13 points at 31,960.65.
After a bleak trading day on Thursday, U.S. President Donald Trump extended the deadline for potential action against Iran to April 6, should oil tankers remain obstructed in the Persian Gulf. While oil prices initially retreated following this announcement, they resumed their ascent as trading shifted from Asia to Europe and back to Wall Street.
Despite Trump’s delay announcement, conflicts persisted in the Middle East, with no signs of de-escalation from Iran and threats of increased hostilities from Israel. Investors were disheartened by the diplomatic discord between the U.S. and Iran, leading to a decline in risk appetite by week’s end.
Oil prices surged, with Brent crude climbing 3.4% to $105.32 per barrel and U.S. crude rising 5.5% to $99.64 per barrel. Concerns lingered in financial circles over potential disruptions to oil and gas production in the Persian Gulf, which could trigger widespread inflationary pressures on the global economy.
Market strategists projected that if the conflict extends through June, oil prices could soar to $200 per barrel, marking a historic high. On Wall Street, the majority of stocks registered declines, with technology shares like Amazon, Meta Platforms, and Nvidia bearing notable losses. Non-essential goods companies also saw sharp drops, exemplified by Norwegian Cruise Line Holdings, Starbucks, and Chipotle Mexican Grill.
Internationally, European markets mirrored the downward trend seen in Asia. Treasury yields fluctuated, with the 10-year Treasury yield briefly hitting 4.48% before easing to 4.43%. The uptick in yields has already impacted mortgage rates and other consumer loans, potentially dampening economic growth. This escalation in rates and bond market instability were cited by Trump as key reasons for his previous tariff threats, which were retracted in response to market concerns.
Overall, the persistent conflict in the Middle East and its ripple effects on global markets have created a climate of uncertainty and volatility across financial sectors.