NEW YORK — Oil jumped to its highest level since 2023 on Friday amid widening conflict involving Iran, while a weak U.S. jobs update pushed stocks lower and capped Wall Street’s worst week since October.
The S&P 500 fell 1.3% after data showed U.S. employers cut more jobs than they created last month, and after oil rose above $90 a barrel. The Dow plunged as much as 945 points intraday before closing down 453.19 points, or 0.9%, to 47,501.55. The Nasdaq dropped 1.6%, sliding 361.31 points to 22,387.68. The Russell 2000 of small-cap stocks led declines, off 2.3%.
Economists and strategists warned the mix of slowing jobs and rising energy costs raises stagflation fears — a stagnant economy combined with high inflation. “A negative payrolls number combined with a big jump in oil prices will have traders worrying about stagflation risks,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management. A separate report showing weaker-than-expected January retail receipts added to concerns that household spending may be near its limits.
The Federal Reserve faces a difficult trade-off: cutting rates can support a weakening economy but risks boosting inflation, and surging oil is already adding upward pressure to prices. Brent crude, the international benchmark, rose 8.5% to settle at $92.69 and briefly touched above $94 — its highest since September 2023. U.S. benchmark crude jumped 12.2% to $90.90, topping $90 for the first time since 2023. Oil has climbed from near $70 late last week as the war expanded into areas key to oil and gas production and shipping, particularly around the Strait of Hormuz, which handles about a fifth of global seaborne oil.
The U.S. said more about a plan to offer insurance for ships transiting the strait after President Trump had announced it earlier, but the details had little calming effect on markets. Analysts warn that a sustained move toward $100 per barrel would pose a severe strain on the global economy, though markets have historically recovered quickly from Middle East conflicts if oil doesn’t stay too high for too long. The recent volatility produced large intraday swings, including a rebound earlier in the week when the S&P erased an initial drop to finish slightly higher Monday.
In fixed income, Treasury yields wavered as higher oil pushed yields up while disappointing economic data put downward pressure on them. The 10-year yield rose toward 4.19% before settling around 4.14%, up from 4.13% late Thursday and 3.97% a week earlier.
Sectors sensitive to fuel costs were hit hardest. Old Dominion Freight Line plunged 7.9%, Carnival fell 5%, and Southwest Airlines lost 5.3%. Global markets were mixed: London’s FTSE 100 slipped 1.2%, Hong Kong’s Hang Seng gained 1.7%, and South Korea’s Kospi was nearly unchanged after swinging widely earlier in the week.
Trump signaled he wants an “unconditional surrender” from Iran, apparently ruling out negotiations, further adding to geopolitical uncertainty that is contributing to market volatility.