Global and U.S. stock markets tumbled on Thursday, driven by a sharp surge in crude oil prices and heavy losses among major technology companies, according to AP News. The international standard Brent crude oil jumped 7% to settle at $100.69 a barrel, marking its highest price since May. The commodity surge was fueled by increased fighting in the Middle East that threatened to slow the global flow of crude oil, alongside threats of major military action by President Donald Trump against Iran-backed Houthi rebels in Yemen over attacks on shipping routes, as detailed by AP News and Reuters.
Global Markets Plunge as Crude Oil Reaches $100 Per Barrel
The spike in energy costs created immediate pressure across Wall Street by raising operating expenses for businesses and diminishing consumer spending power. The S&P 500 fell 1.2%, putting it on track for its first consecutive weekly loss since March. The Dow Jones Industrial Average dropped 506.93 points, or 1%, to close at 51,711.65, while the Nasdaq composite sank 2.2%, or 553.21 points, to 25,137.69. European and U.S. stocks slumped broadly, with European indexes dropping 1.3% and the UK market falling 0.7%, according to Reuters.
Big Tech Cash Burn and Earnings Disappointments Weigh on Wall Street
Market sentiment was further damaged by financial reports from influential technology companies. Alphabet and Tesla released earnings revealing that both firms are burning through cash at rapid rates due to heavy capital spending. Alphabet shares dropped 7%, gapping below their 200-day moving average, while Tesla shares tumbled 14.5% to an 11-month low after reporting weaker-than-expected profits. Other major tech stocks, including Microsoft, Meta Platforms, and Amazon, also experienced slumps.
Companies with high fuel bills faced steep declines despite reporting otherwise positive quarterly profits. American Airlines saw its stock fall 8.4% and Southwest Airlines dropped 6.2%, even though both carriers posted stronger-than-expected spring profits by raising airfares to offset surging fuel expenses. Meanwhile, retail gasoline prices across the United States climbed to an average of $4.09 per gallon, up from $3.93 a month prior.
Bond Yields Surge and Central Bank Policy Outlook Shifts
The broader economic fallout extended deep into fixed-income and currency markets as inflation fears returned. The yield on the 10-year U.S. Treasury rose to 4.69%, up from 4.67% late Wednesday and well above the 3.97% rate recorded before the conflict with Iran began. According to Reuters, U.S. bond yields hit their highest levels in 18 months, pushing long-term U.S. mortgage rates to their highest marks in nearly a year. Rates traders began pricing in 60 basis points of Federal Reserve interest rate hikes by April.
Abroad, the European Central Bank kept interest rates on hold, though European Central Bank President Christine Lagarde signaled that a rate increase is on track for the next meeting in September, noting that the full impact of the ongoing second oil shock has yet to be felt. In currency markets, the dollar against the yen climbed toward 164.00, marking a new 40-year high.
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