Wall Street close down as Middle East fears push US oil up 8%
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Traders working on the floor of the New York Stock Exchange, in New York City, on March 5.
PHOTO: REUTERS
- Middle East conflict pushed US oil prices up 8.5% to US$81/barrel, highest since July 2024, sparking inflation worries.
- US stocks fell on March 5; S&P 500 lost 0.57%, Nasdaq 0.25%, Dow 1.62%. Broadcom's strong AI chip forecast limited declines.
- Rising inflation expectations and a tight labour market suggest the Federal Reserve will delay interest rate cuts until October.
AI generated
NEW YORK - US stocks closed down on March 5 as the Middle East conflict entered its sixth day, pushing oil prices higher and spurring worries about inflation and whether the Federal Reserve will cut interest rates.
Expansion of the conflict to more countries fed fears of disruption in the Strait of Hormuz, a critical energy choke point, where missile and drone threats have drastically reduced tanker traffic.
This lifted US crude prices about 8.5 per cent to US$81 per barrel, the highest since July 2024. Global benchmark Brent crude rose 4.9 per cent to US$85.41.
Traders worry a prolonged interruption could feed inflation and slow economic growth.
“Look at oil today, it tells you everything you need to know about why the stock market’s down,” said Mr Michael Antonelli, market strategist at Baird Private Wealth Management. “The market is really trying to grapple with how long this conflict will last”.
According to preliminary data, the S&P 500 lost 39.37 points, or 0.57 per cent, to end at 6,830.13 points, while the Nasdaq Composite lost 58.18 points, or 0.25 per cent, to 22,749.31.
The Dow Jones Industrial Average fell 790.63 points, or 1.62 per cent, to 47,948.78.
The S&P 500 indexes that track performance of major US companies in the industrials, materials and healthcare sectors have led declines. The passenger airlines sub-sector tumbled.
Limiting losses was a strong forecast from chip designer Broadcom that projected its artificial intelligence chip revenue would exceed US$100 billion (S$130 billion) in 2027. Its shares rose 3.2 per cent.
With the US-Israeli air war against Iran raging, Wall Street has outperformed its European and Asian counterparts this week, aided primarily by technology stocks that bore the brunt of February’s selloff.
Any signs that crude prices could hit US$100 a barrel would be worrisome, and investors were on the lookout for reports that the conflict could be nearing its end.
Stronger-than-expected ISM manufacturing and services results, along with firmer jobless-claims data, pushed investors’ unofficial payroll expectations higher, suggesting the labor market may be tighter than assumed, said Mr Steve Ricchiuto, chief economist at Mizuho Securities.
Investors expect price pressures to delay a 25-basis-point interest rate cut by the Federal Reserve to October from July, according to LSEG-compiled data.
Declines in financials such as JPMorgan Chase and Goldman Sachs also weighed on the blue-chip Dow.
Data showed the number of Americans filing new applications for unemployment benefits was unchanged last week. REUTERS
