Stocks fell in choppy trading on Thursday as oil prices rose after President Donald Trump said the war with Iran would last for weeks.
The Dow Jones Industrial Average traded down 96 points, or 0.2%. The S&P 500 and Nasdaq Composite were down 0.1%.
The three major indexes briefly rebounded from steep losses earlier in the day after Iranian state media reported that the Middle Eastern country was working with Oman on a protocol to “monitor” ships passing through the Strait of Hormuz. At their lowest levels, the Dow fell more than 600 points, or 1.4%, while the S&P 500 and Nasdaq fell 1.5% and 2.2%, respectively.
“It’s critical for the United States to reopen the strait, not so much for oil but for helium,” said Todd Schoenberger, chief information officer at CrossCheck Management, noting that helium is “more valuable than oil” given its use in semiconductor processing and that “there is no substitute for it.”
“Expect more volatility ahead of the long weekend,” he added.
The indexes continued to oscillate between gains and losses throughout the session after the event before finally moving lower. The CBOE Volatility Index, otherwise known as Wall Street’s fear gauge, rose above 25.
“I think investors have a knee-jerk reaction — they want the news to be good, but then they think about it a little longer and decide that maybe the uncertainty is still too high, hence the high intraday volatility,” Melissa Brown, director of investment decision research at SimCorp, told CNBC.
Trump gave a speech Wednesday night, providing an update on the conflict in the Middle East. Although he said the US was “very close” to ending the war with Iran, Trump added that the nation would “hit very hard” on Tehran.
“In the next two to three weeks, we will return them to the Stone Age where they belong,” the president said.
His comments sent oil prices soaring. West Texas Intermediate crude oil futures rose 11.41% to $111.54 a barrel – the highest level since June 28, 2022. Brent crude oil futures rose 7.78% to $109.03 a barrel.
