Dow falls more than 800 points, S&P 500 and Nasdaq sink as Iran war jitters return with another oil surge

Geopolitics has no playbook, so watch this one closely. On Wednesday, I outlined three markets with key levels to gauge if the risk-off theme might accelerate.

First, crude oil. WTI (CL=F) just tagged $82 per barrel and is holding over $80. This changes the macro narrative where inflation fears compound fast. That’s a red warning light.

Second, the dollar. If the US dollar index (DX-Y.NYB) pushes above 100, financial conditions tighten and risk markets usually feel it. It’s still only slightly above 99, so that warning light isn’t quite flashing.

Third, the S&P 500 (^GSPC). America’s benchmark index is teetering on the 6,800 level with only minutes left in the trading day. A close below 6,800 says the shock is sticking and turns that warning light red.

Peering inside the S&P, industrials are the weakest, down the most since April 2025. Even defense names like Raytheon (RTX) and Lockheed Martin (LMT) — the “flight-to-safety trade” from earlier in the week — are getting tagged. Meanwhile, energy (XLE) is having trouble staying green.

Gold (GC=F) futures tumbled more than 1% on Thursday amid a broader market sell-off. The safe-haven asset was sold off amid a move higher in the US dollar, making it more expensive for foreign buyers.

Silver (SI=F), platinum (PL=F), and palladium (PA=F) futures also sold off.

A strong greenback also put pressure on stocks and crypto. The 10-year Treasury also sold off as yields rose.

It’s not just gasoline prices spiking at the pump. Diesel has jumped even more since the outbreak of the Middle East war as oil prices have surged.

The national average for gas touched the highest level this year at $3.25 per gallon on Thursday, up $0.27 from a week ago, according to AAA data.

Diesel jumped by $0.41 over the same period to $4.16 per gallon, its highest level since 2023.

Read more here.

President Trump announced the replacement of Homeland Security Secretary Kristi Noem with Oklahoma Senator Markwayne Mullin.

“I am pleased to announce that the Highly Respected United States Senator from the Great State of Oklahoma, Markwayne Mullin, will become the United States Secretary of Homeland Security (DHS), effective March 31, 2026,” wrote Trump on social media.

Kristi Noem will be moving to serve as Special Envoy for The Shield of the Americas, a new security initiative that will be announced on Saturday.

Futures on US oil (CL=F) crossed $80 for the first time since January 2025 in midday trading on Thursday, breaking through a key resistance level as the growing conflict in Iran has sent prices surging throughout the week.

West Texas Intermediate crude, the US pricing benchmark, gained more than 7.5% today to trade above $80.20 at around 1:25 p.m. ET. Futures on the international benchmark Brent (BZ=F) have picked up a smaller 4.5% to trade above $85 for the first time since July 2024.

WTI and Brent have now gained more than 20% and more than 17%, respectively, as the Iranian conflict has forced traffic through the key global chokepoint, the Strait of Hormuz, to stand still and increasingly impacted major energy infrastructure, such as Saudi Arabia’s Ras Tanura refinery, which is now offline.

The war has impacted countries throughout the Gulf, from Oman and Bahrain to Lebanon, Saudi Arabia, and the UAE.

Saudi Arabia is attempting to divert its oil flows through its East-West Pipeline that passes through the country to the Red Sea, but the pipeline can only absorb roughly 5 million to 7 million barrels per day against the roughly 20 million bpd that crosses through the Strait of Hormuz on a normal day.

When so-called core PCE inflation came in a 3% for December, dovish members of the Fed were quick to attribute the uptick to the White House’s tariff regime — but they’re looking at the wrong variable, according to Bank of America economists Aditya Bhave and Stephen Juneau.

Tariffs have contributed roughly 50 basis points to core PCE inflation, “but that’s only half the Fed’s inflation problem,” the economists wrote in a client note published Thursday morning. More worrying, they wrote, is sticky services inflation that “warrants caution from the Fed.”

If the Fed were to continue easing with deeper rate cuts, the central bank would be taking “the risk that a 30-50bp inflation overshoot gets entrenched,” Bhave and Juneau wrote.

Traders are currently pricing in a 97.3% chance that the Fed will leave the target rate unchanged at 3.5% to 3.75% in its upcoming March meeting, with expectations remaining that the Fed will cut rates by 25 to 50 basis points by the end of the year.

Bond yields are jumping with crude oil (CL=F, BZ=F) this week, but the move is looking bigger than a simple inflation scare (due to higher energy prices).

Since the weekend missile strikes on Iran, the US 10-year yield (^TNX) is up 18 basis points (its biggest weekly jump since May), while WTI just hit $79 a barrel — pushing toward its highest levels since mid-2022 and on track for its biggest weekly gain since the March 2022 Russia-Ukraine shock.

The tell is in the bond market math. Bond yields move for two reasons — expected inflation (so-called breakevens) and the inflation-adjusted return (real yields, often inferred from TIPS).

This week, breakevens are only up about 5 basis points, while real yields are up about 12 basis points. Translation: Investors aren’t just pricing inflation — they’re demanding more compensation to own long-term bonds (what’s called the term premium), and they’re dialing back expectations for Fed rate cuts.

And yes, WTI near $80 is a big deal. That level can flip the macro narrative from a short-lived spike to higher-for-longer energy costs — especially if any disruption risk around the Strait of Hormuz starts to look persistent.

The court system is pushing tariff refund claims forward, ordering that the Justice Department can’t delay the issue and that the government must refund all illegally collected tariffs. The rulings come as a blow to the Trump administration, which is all but guaranteed to appeal the issue.

Yahoo Finance’s Washington correspondent Ben Werschkul reports:

Read more here.

Oil prices surged in a renewed rally Thursday morning, following 24 hours of relatively constrained trading, as the conflict engulfing the Middle East continued to expand.

Futures on Brent crude (BZ=F), the international pricing benchmark, rose by more than 3% to trade above $83.90 after crossing $84 later in the morning. US benchmark West Texas Intermediate crude (CL=F) gained more than 4% to trade above $77.70 after briefly touching $78.

The price pressures are twofold.

As the conflict enters its sixth day, the Strait of Hormuz remains effectively blocked. Iran’s Revolutionary Guard Corps has said the Strait remains open but has increasingly threatened tankers that attempt to cross the critical global energy chokepoint.

President Trump’s announcement that the US would provide insurance and security guarantees to vessels transiting the strait provided some temporary relief to markets, but insurance insiders say there is too much uncertainty to spur any immediate renewal in crossings.

At the same time, the conflict has widened, drawing in Qatar, Bahrain, Saudi Arabia, and the United Arab Emirates. Early Thursday morning, Israel ordered residents to leave southern Beirut in Lebanon as the IDF battles the Iran-backed terrorist group Hezbollah, and Azerbaijan vowed to respond to a drone attack.

The US stock market fell on Thursday morning as Wall Street failed to build on a rebound session, looking toward labor data ahead of Friday’s jobs report to temper ongoing concerns over conflict throughout the Gulf region.

The Dow Jones Industrial Average (^DJI) led the decline, losing roughly 0.7%, while the S&P 500 (^GSPC) and the tech-exposed Nasdaq Composite (^IXIC) lost roughly 0.3% and 0.4%, respectively.

In the oil markets, prices have begun to surge again after flatlining Wednesday. Futures on West Texas Intermediate (CL=F) traded around $76 a barrel, while Brent crude (BZ=F) traded above $83.

Friday’s monthly jobs report will lead headline the economic calendar for the week. In the corporate world, Costco (COST) and Marvell Technology (MRVL) will report results after the close on Thursday.

Berkshire Hathaway (BRK-B) CEO Greg Abel bought over $15 million of the firm’s stock, according to a regulatory filing, and said he would use all of his take-home pay to keep doing so.

“I already have some shares, but the goal was to continue to demonstrate alignment with them,” Abel told CNBC. “As the CEO, I absolutely, obviously, believe in Berkshire. … I inherited a company that has an incredible foundation.”

Berkshire also restarted share buybacks on Wednesday. Berkshire policy says the company may repurchase stock “whenever the chief executive — after consultation with the chairman of the board Warren Buffett — believes that the repurchase price is below Berkshire’s intrinsic value,” per CNBC.

Abel told the outlet that he consulted with Buffett — from whom he took over at Berkshire in January — about the move.

Berkshire’s Class B shares rose in premarket trading after falling early this week in the wake of the company’s quarterly earnings report. In that report, Berkshire revealed its operating profit fell 30% in the period, which included a 54% decline in its insurance underwriting earnings.

Data released by the Labor Department showed that 213,000 people filed initial jobless claims in the week ended Feb. 28.

The count of claims, steady from the previous week’s revised level, was below economist expectations of 215,000 initial claims. The labor market signal comes ahead of Friday’s critical February jobs report.

Continuing claims for the week ended Feb. 21 totaled 1.86 million, overshooting consensus estimates of 1.84 million.

Rhode Island, Oklahoma, and Tennessee saw the largest increase in initial claims for the week ended Feb. 21, the Labor Department said.

On Friday, investors will get the week’s standout labor-market reading with the Bureau of Labor Statistics nonfarm payrolls report. Economists are expecting to see 55,000 jobs added in February, roughly in line with January estimates before the month’s adds printed at a blowout 130,000.

On Wednesday, data provider ADP reported 63,000 jobs added to private payrolls, exceeding estimates of 50,000. Layoff announcements also slid in February from the previous month to 48,307 from 108,435, according to a new report released Thursday from the global outplacement firm Challenger, Gray & Christmas.

It’s not just employees that have to worry about AI stealing their jobs, or creating labor uncertainty; it’s also entire companies. Some economists say the fears of an AI job apocalypse are overblown but the stock market thinks otherwise.

Bloomberg News reports:

Read more here.

Trade Desk (TTD) stock jumped 19% before the bell on Thursday after reports emerged from The Information that OpenAI has had early talks to partner with the platform, which offers automated services for advertisers to place ads on a large scale.

The Information reports:

Read more here.