Stocks in the U.S. experienced significant declines on Friday, concluding a fifth consecutive week of losses, marking the longest such streak in almost four years. The S&P 500 dropped by 1.7%, marking its worst week since the onset of the conflict with Iran. The Dow Jones Industrial Average shed 793 points, a decline of 1.7%, and fell over 10% from its previous record high set a month ago. Additionally, the Nasdaq composite declined by 2.1%.
The Dow’s decline confirmed a correction, defined as a 10% drop from a previous peak, following the Nasdaq’s similar move the day before. This week, the U.S. stock market fluctuated between gains and losses as optimism regarding a potential resolution to the conflict wavered.
Contrary to the U.S. market, Canada’s primary stock index closed slightly higher, supported by gains in the basic materials sector. The S&P/TSX composite index ended the day up 73.13 points at 31,960.65.
Subsequent to the dismal trading day on Thursday, U.S. President Donald Trump extended the deadline for potential actions against Iran to April 6, should Iran fail to allow oil tankers to resume passage through the Strait of Hormuz. This announcement briefly eased oil prices, signaling hope for market normalcy. However, prices resumed their ascent as trading shifted back to Wall Street.
Despite the extension, conflict persisted in the Middle East as Iran showed no signs of backing down, while Israel threatened to escalate its attacks on Iran. The conflicting statements from the U.S. and Iran dismayed investors, leading to a decline in risk appetite by the end of the week.
Oil prices surged, with Brent crude climbing by 3.4% to $105.32 per barrel and U.S. crude rising by 5.5% to $99.64 per barrel. Market concerns focus on potential disruptions to oil and gas production in the Persian Gulf, which could lead to prolonged supply shortages and inflationary pressures on the global economy.
Analysts predict that if the conflict persists until the end of June, oil prices could reach a record high of $200 per barrel. On Wall Street, most stocks, particularly tech giants like Amazon and Meta Platforms, experienced declines, impacting the overall market health. Non-essential sectors also faced significant drops, with companies like Norwegian Cruise Line Holdings and Starbucks affected.
Stock markets in Europe fell, following a mixed performance in Asia. Treasury yields fluctuated, with the 10-year Treasury yield rising to 4.48% before retracting to 4.43%. The rise in yields has led to increased rates for mortgages and other loans, slowing economic growth. Trump’s previous concerns about high Treasury yields and bond market disruptions resurfaced, impacting market sentiments.