Oil surged to its highest levels since 2023 on Friday as an expanding conflict involving Iran drove energy prices up, while a weak U.S. jobs report sent stocks lower and capped Wall Street’s worst week since October. The S&P 500 fell 1.3% after payrolls data showed U.S. employers cut more jobs than they added last month. The Dow Jones Industrial Average plunged as much as 945 points intraday before closing down 453.19 points, or 0.9%. The Nasdaq composite lost 1.6%.
Analysts warned the combination of disappointing jobs data and sharply higher oil raises stagflation concerns — the risk of stagnant growth alongside rising inflation — which complicates the Federal Reserve’s policy choices. A separate report showing U.S. retailers earned less than expected in January added to doubts about consumer spending, the main engine of the economy. The Fed typically combats a slowing economy with rate cuts, but easing risks lifting inflation, and surging oil is already increasing energy costs.
Brent crude jumped 8.5% to settle at $92.69 a barrel and briefly topped $94, its strongest level since September 2023. U.S. benchmark crude rose 12.2% to $90.90, breaking $90 for the first time since 2023. Oil has climbed from near $70 late last week as the conflict spread to areas crucial for oil production and shipping, and markets focused on the Strait of Hormuz, which normally carries about a fifth of global oil. The U.S. government released details of a plan to offer insurance for ships transiting the strait, but that had limited calming effect. Analysts cautioned that sustained oil at $100 a barrel or higher could strain the global economy.
Volatility was pronounced this week; history shows markets can rebound after Middle East flare-ups if oil doesn’t stay elevated, but uncertainty over how high and how long prices will rise produced swings sometimes measured hour by hour. Political signals also mattered: President Trump recently called for an “unconditional surrender” from Iran, a stance that could influence investor sentiment.
In Treasuries, yields wavered as higher oil pushed yields up while weak economic data pulled them down. The 10-year Treasury yield rose toward 4.19% before slipping back to about 4.14%, up from 4.13% late Thursday and 3.97% a week earlier. Small-cap stocks, often sensitive to borrowing costs and domestic demand, suffered the steepest losses: the Russell 2000 fell 2.3%.
Energy- and travel-related companies were among the hardest hit. Old Dominion Freight Line dropped 7.9%, Carnival fell 5%, and Southwest Airlines declined 5.3%. At the close, the S&P 500 was down 90.69 points at 6,740.02; the Dow closed at 47,501.55, down 453.19; and the Nasdaq ended at 22,387.68, down 361.31.
Globally, European markets slid while Asian results were mixed. London’s FTSE 100 fell 1.2%, Hong Kong’s Hang Seng climbed 1.7%, and South Korea’s Kospi was nearly unchanged after a dramatic midweek swing in which it plunged 12.1% on Wednesday and rebounded 9.6% on Thursday.