Oil climbed to its highest levels since 2023 on Friday as widening conflict tied to Iran pushed energy prices higher, while a disappointing U.S. jobs report sent stock indexes lower and capped Wall Street’s worst week since October.
The S&P 500 dropped 1.3% after data showed U.S. employers shed more jobs than they added in the latest month. The Dow swung sharply intraday, falling as much as 945 points before closing down 453.19 points, or 0.9%, at 47,501.55. The Nasdaq declined 1.6%, sliding 361.31 points to 22,387.68. Small-cap stocks led losses: the Russell 2000 fell about 2.3%.
Economists warned the combination of slowing hiring and rising energy costs raises stagflation risks — a stagnant economy alongside elevated inflation. Brian Jacobsen, chief economic strategist at Annex Wealth Management, said the negative payrolls print together with a jump in oil prices is likely to heighten traders’ concerns about those risks. A separate report showing weaker-than-expected January retail receipts added to worries that household spending may be approaching its limits.
Brent crude, the international benchmark, settled up 8.5% at $92.69 and briefly touched above $94, its highest since September 2023. U.S. crude jumped 12.2% to $90.90, topping $90 for the first time since 2023. Oil has surged from roughly $70 late last week as the conflict spread into areas important for oil and gas production and shipping, notably around the Strait of Hormuz, which handles about one-fifth of global seaborne oil.
U.S. officials provided more details on a plan to offer insurance for vessels transiting the strait after President Trump had announced the idea, but the new information did little to calm markets. Analysts say a sustained move toward $100 per barrel would put serious strain on the global economy, though markets have in the past recovered quickly from Middle East flare-ups if elevated prices don’t persist.
The Federal Reserve faces a difficult trade-off: lowering interest rates could help a weakening economy but risks stoking inflation that is already being pushed upward by higher energy costs.
Treasury yields wavered as rising oil put upward pressure on rates while the weak economic data pulled them down. The 10-year Treasury yield rose toward 4.19% at one point before settling around 4.14%, up from about 3.97% a week earlier.
Sectors most sensitive to fuel costs were hit hardest. Trucking company Old Dominion Freight Line fell 7.9%, Carnival dropped 5%, and Southwest Airlines lost 5.3%.
Global markets were mixed: London’s FTSE 100 slipped about 1.2%, Hong Kong’s Hang Seng gained 1.7%, and South Korea’s Kospi was roughly unchanged after wide swings earlier in the week.
Geopolitical rhetoric added to the uncertainty. President Trump signaled he expects an “unconditional surrender” from Iran, an apparent rejection of negotiations that further amplified market volatility.