Stocks were under pressure on Thursday as oil prices added to their surge on supply disruption worries while the Iran war continued.
The Dow Jones Industrial Average fell 739.42 points, or 1.56%, closing at 46,677.85. The S&P 500 lost 1.52% and settled at 6,672.62, while the Nasdaq Composite shed 1.78% to end at 22,311.98. All three indexes posted closing lows for 2026, and the 30-stock Dow ended the session below the 47,000 threshold for the first time this year.
Crude prices continued to climb after Iran's new supreme leader, Mojtaba Khamenei, who was appointed on March 9, said that the Strait of Hormuz should remain closed as a "tool to pressure the enemy." West Texas Intermediate futures rose 9.72% to settle at $95.73 per barrel. Brent crude futures settled up 9.22% to $100.46 per barrel — its first close above $100 since August 2022.
Energy Secretary Chris Wright told CNBC Thursday that the U.S. Navy is "not ready" to escort oil tankers through the Strait, though he said it will likely be able to do so by the end of the month. Traffic there has practically reached a standstill as the conflict in the Middle East escalates.
Overnight, three additional foreign vessels were hit in the Persian Gulf, according to authorities. That comes after three separate ships, including one in the Strait, had been struck Wednesday.
U.S. forces on Tuesday sunk 16 mine-laying Iranian ships near the Strait. Insurance company Chubb was announced as the lead underwriter for a U.S. government-led program to provide insurance to ships attempting to traverse the key passageway.
"Iran's strategy of sowing economic chaos in the Gulf is working as tankers come under attack and Hormuz stays shuttered, pushing Brent up toward $100," said Adam Crisafulli of Vital Knowledge in a note. "The U.S. and Israel have military dominance and Iran's missile/nuclear programs may be degraded, but Tehran's hardline [government] is firmly entrenched, and its plan now seems to be leveraging oil to push Trump further down an off-ramp."
To help ease energy costs, Wright said late Wednesday that the U.S. will release 172 million barrels of oil from the Strategic Petroleum Reserve. It will take about 120 days to deliver the fuel.
The International Energy Agency also on Wednesday agreed to a coordinated release of 400 million barrels of oil in an effort to combat the supply disruption caused by the war. Oil prices remained higher in the previous session, however, amid worries that the conflict could be drawn out.
President Donald Trump earlier this week said that the war will end "very soon," which had caused a reprieve in surging oil prices after they topped $100 a barrel.
"If energy costs and gasoline prices remain at current levels or rise for a period due to developments in the Middle East, it may weigh on consumer sentiment and push affordability issues to the forefront as we get closer to the midterm elections," said Anthony Saglimbene, chief market strategist at Ameriprise.
"That said, overall consumer balance sheets remain in solid condition, income and employment conditions are currently sound, and inflation continues to ease in important pockets, namely shelter," he continued. "Over time, if inflation continues to ease (outside of temporary energy impacts) and markets and the economy hold on firm footing, Americans' attitudes about their ability to afford everyday life could improve."
Despite the ongoing conflict, the S&P 500's pullback has been relatively tame with the benchmark just more than 4% off its record reached in January.
Eight of the 11 S&P 500 sectors were negative Thursday, with banks and tech stocks in the red. Morgan Stanley led financials lower after capping private credit fund withdrawals. Energy stocks, including Chevron and Exxon Mobil, were among the few stocks in the green.
