US stocks close down as oil spikes 12%, job market weakens
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Traders working on the floor of the New York Stock Exchange, in New York City, on March 6.
PHOTO: REUTERS
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- Oil prices surged due to Middle East conflict, with US crude climbing over 12% and Brent rising by 8.5%, increasing market volatility.
- Weakening US jobs data, including a rise in unemployment to 4.4%, intensified fears of an economic slowdown and complicated Federal Reserve rate cut plans.
- Wall Street indexes closed down; the S&P 500 fell 1.33%, and the Nasdaq dropped 1.59%, due to rising oil prices and disappointing payrolls report.
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NEW YORK - Wall Street’s three main indexes closed down on March 6 amid a sudden setback in the US labour market and a 12 per cent spike in US oil prices due to the escalating conflict in the Middle East.
A disappointing payrolls report intensified worries that the US economy could be cooling just as geopolitical tensions in the Middle East push energy costs sharply higher.
That mix threatens to box in the Federal Reserve, complicating its path to rate cuts and reviving concerns about renewed inflation pressure.
“It’s a one-two punch for the stock market today: the weak jobs report and the escalating price of oil,” said Ms Kristina Hooper, chief market strategist at financial firm Man Group in New York.
Oil prices jumped, driven by the US-Israeli military attack in Iran, which halted shipping through the Strait of Hormuz, and by warnings from Qatar that crude could surge to US$150 a barrel.
US crude oil futures climbed more than 12 per cent on March 6, to more than US$90 a barrel, while international Brent rose about 8.5 per cent to US$92 a barrel, quickly approaching the US$100 psychological barrier that alarms markets.
“We are marching closer each day to US$100 a barrel of oil, and that has caused much greater volatility and anxiety,” said Mr Michael Arone, chief investment strategist at State Street Investment Management.
The Cboe Volatility Index, Wall Street’s most watched gauge of investor anxiety, rose to a near five-month high, gaining about four points to 28.2, signalling heightened worries about more stock market pain in the near term.
The increase in oil prices fueled expectations of higher input costs and pressure on corporate profits, adding to the likelihood of weaker credit conditions, which is typically negative for lenders.
The S&P 500 Banks Index, which tracks the performance of major US bank stocks within the S&P 500, fell.
BlackRock’s decision to limit withdrawals from a major private credit fund after a spike in redemption requests added to those concerns, echoing similar limits at Blackstone earlier in the week.
Signs of a weakening US jobs market came amid a strike by healthcare workers and harsh winter weather. The unemployment rate increased to 4.4 per cent.
Traders pulled forward bets for a 25-basis-point interest rate cut by the Federal Reserve, with odds at about even for June, from about 35 per cent earlier in the day, according to LSEG-compiled data.
According to preliminary data, the S&P 500 lost 91.64 points, or 1.33 per cent, to end at 6,739.88 points, while the Nasdaq Composite lost 361.31 points, or 1.59 per cent, to 22,387.68.
The Dow Jones Industrial Average fell 447.12 points, or 0.93 per cent, to 47,507.62.
Lender Western Alliance fell after suing Jefferies for not making a payment for loans tied to bankrupt auto parts supplier First Brands Group. Jefferies also dropped.
Among other stocks, chip company Marvell Technology jumped after forecasting fiscal 2028 revenue above estimates. REUTERS
