U.S. Stocks Slide as Iran War Fuels Oil Price Volatility and Market Uncertainty

U.S. stocks closed lower on Friday, wrapping up a turbulent week as surging crude oil prices rattled equity markets. All three major indexes — the Dow Jones, S&P 500, and Nasdaq — posted both daily and weekly losses, while the small-cap Russell 2000 hit its lowest close of the year.

Oil markets swung wildly before ultimately pushing higher, even as President Donald Trump temporarily eased sanctions on Russian oil to help ease supply concerns. Front-month WTI crude settled at $98.71 per barrel, gaining over 3% on the day, while Brent crude climbed above $100 per barrel for the first time since August 2022. Analysts described the energy market's recent swings as rivaling the volatility typically seen in cryptocurrency, suggesting the moves are more emotion-driven than fundamentals-based.

Escalating conflict involving Iran — with reports of fighting spreading to Lebanon, Kuwait, Iraq, and several Gulf nations — has all but extinguished hopes for a swift resolution. Iran's tightening control over the Strait of Hormuz, a critical chokepoint for roughly one-fifth of global oil supply, prompted the International Energy Agency to warn of the largest-ever disruption to worldwide crude output.

On the economic front, a sharp downward revision to fourth-quarter GDP growth compounded investor anxiety. The Fed's preferred inflation measure showed little relief, and durable goods demand weakened. Despite these softening signals, the Federal Reserve is widely expected to hold interest rates steady at its upcoming meeting, as persistent inflation and rising energy costs make near-term rate cuts unlikely.

The Dow fell 119 points, the S&P 500 dropped 0.61%, and the Nasdaq shed nearly 1%. Technology stocks led sector losses, while utilities outperformed. Adobe tumbled 7.6% following its CEO departure announcement, and Meta fell 3.8% after reports of a delayed AI model release added to broader sentiment concerns.