Stocks Decline as Oil Prices Rise Following Trump’s Address
Stocks opened lower on Thursday as President Donald Trump’s address regarding the ongoing conflict in Iran failed to instill confidence in the markets. The S&P 500 dropped 1.3%, while the Nasdaq Composite fell by 1.8% and the Dow Jones Industrial Average saw a decline of 625 points. Similarly, the Russell 2000 Index, which tracks small and mid-cap companies, decreased by 1.6%.
Trump’s Promises Raise Economic Concerns
In a speech delivered on Wednesday, President Trump claimed that the war would conclude “soon,” yet he pledged further “very strong” actions against Iran over the next two to three weeks. This lack of an actionable plan toward a ceasefire, coupled with no clear strategy for reopening the key Strait of Hormuz—through which over 20% of the world’s oil supply transits—left investors feeling uneasy. Trump suggested that “the straits will open up on their own,” which did little to reassure market participants.
Oil Prices Surge Amidst Geopolitical Uncertainty
As Trump’s speech unfolded, oil prices began to climb sharply, reversing two consecutive days of declines. U.S. crude surged 12% to over $113 per barrel, while Brent crude—the international benchmark—rose by 8% to surpass $109 per barrel. Prices of substitutes for jet fuel, such as kerosene and natural gas, also saw significant increases.
Gasoline Prices Spike for Consumers
On Thursday, the national average price for a gallon of unleaded gasoline reached $4.08, a significant jump from $2.98 before the onset of the conflict. GasBuddy analyst Patrick de Haan noted that motorists should expect to see higher prices at the pump starting around noon.
Market Reactions and Future Outlook
Paul Donovan, chief investment officer at UBS Global Wealth Management, indicated that the market’s expectations were unmet by Trump’s remarks. He warned that a potential escalation could provoke a reaction from Iran, posing risks to critical Gulf infrastructure. In the meantime, U.S. Treasury yields reflected rising concerns about inflation linked to escalating energy costs, with the yield on the 10-year U.S. Treasury climbing to approximately 4.37%.
Inflation Concerns Intensify
Analysts at Bank of America predicted on Wednesday that headline inflation, measured by the Federal Reserve’s preferred Personal Consumption Expenditures (PCE) index, would “imminently spike” and potentially peak near 4% this quarter. This follows a January reading of 2.8%. Inflation is already on the rise in Europe, with eurozone inflation climbing to 2.5% in March from 1.9% in February, raising fears of a similar trend in the U.S.
Market Sentiment Before the Holiday Weekend
Thursday also marks the last trading session of the week for stocks, as U.S. markets will be closed on Good Friday. Investors often exhibit increased selling activity ahead of long weekends, particularly during times of geopolitical tension. This behavior stems from a desire to avoid being locked into investments during periods of volatility.
