US markets edged lower on Thursday, with all three major indices in the red. At 9:30 AM ET, Dow Jones Industrial Average fell 13.52 points to 46,415.97, while S&P 500 declined 32.27 points, or 0.49%, to 6,559.63. Nasdaq dropped 188.40 points, or 0.86%, to 21,741.43, leading the losses as investors remained cautious.
Oil prices surge, adding pressure on equities
Crude oil prices jumped sharply, putting pressure on equities. Brent crude rose more than 5% to above $106 per barrel, West Texas Intermediate climbed over 3% to above $93. The spike in oil prices raised concerns about inflation and higher input costs, weighing on market sentiment.
Trump’s Iran warning raises geopolitical concerns
Geopolitical tensions increased after President Donald Trump issued a warning to Iran. In a Truth Social post, he said Iran “better get serious soon, before it is too late, because once that happens, there is NO TURNING BACK, and it won’t be pretty.” He also called Iranian negotiators “very different” and “strange,” and said they were “begging” the U.S. to make a deal.
Iran’s foreign minister said the country is reviewing a US proposal but has no intention of holding talks. Meanwhile, Gulf countries condemned Iran’s strikes on energy infrastructure, calling them “criminal” and saying they are ready to defend themselves.
Jobless claims data keeps investors on edge
Economic data also added to caution. Initial jobless claims rose by 5,000 to 210,000 for the week ended March 21, in line with expectations.
Continuing claims fell by 32,000 to 1.82 million, the lowest level in nearly two years, adding that companies are holding on to workers despite weak hiring.
Inflation worries rise as Fed outlook turns uncertain
Rising oil prices have increased fears of higher inflation, which could delay interest rate cuts. Fed Chair Jerome Powell recently described the situation as a “zero employment growth equilibrium,” indicating downside risks.
Treasury yields also moved higher, with the 10-year yield rising to 4.36% from 4.33% the previous day. Higher yields have pushed up borrowing costs, slowing demand in the economy.
Analysts warned that a prolonged disruption to energy supplies could have a broader impact. “A more prolonged disruption to energy supplies would deliver a much larger hit to global activity similar” to the impact seen after Russia’s invasion of Ukraine in 2022 and could “prompt a broader monetary tightening cycle,”analysts at Capital Economics said in a note to clients
Regardless of the recent gains, markets remain sensitive to news flow. Tobin Marcus, head of US policy and politics at Wolfe Research told Investing.com, markets “seem to be concluding that Iran’s negative public message may be a smokescreen for a more accommodating private posture.” He added, “We’re not so sure, and the ambiguity can’t last much longer amid Trump’s 5-day deadline for talks.”
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