Stocks recovered sharply from session lows after Israel committed to helping reopen the Strait of Hormuz, though all three major indexes still finished lower amid a hawkish Federal Reserve and surging energy prices.
By Artha Journal
U.S. equity markets endured their second consecutive losing session Thursday, as a late-afternoon recovery driven by a diplomatic development in the Middle East pulled all three major indexes back from their worst levels of the day. The S&P 500 closed down 0.27% at 6,606.49, the Dow Jones Industrial Average shed 203.72 points, or 0.44%, to settle at 46,021.43, and the Nasdaq Composite slipped 0.28% to end at 22,090.69, according to CNBC.
| Instrument | Price / Level | Change | % Change |
|---|---|---|---|
| S&P 500 | 6,606.49 | ▼−18.01 pts | −0.27% |
| Dow Jones | 46,021.43 | ▼−203.72 pts | −0.44% |
| Nasdaq | 22,090.69 | ▼−62.35 pts | −0.28% |
| WTI Crude | $96.14 | — | −0.2% |
| Brent Crude | $108.65 | — | +1.2% |
| VIX | 25.09 | — | +12.2% |
The session was a study in intraday volatility. The Dow had been down nearly 500 points at the morning low, while the S&P 500 and Nasdaq fell more than 1% and 1.4%, respectively, out of the gate — before staging a dramatic comeback. The catalyst for the reversal came when Israeli Prime Minister Benjamin Netanyahu confirmed that Israel would assist the United States in reopening the Strait of Hormuz, a choke point for roughly 20% of the world’s seaborne oil supply, Bloomberg reported. That announcement sent West Texas Intermediate crude futures down to settle at $96.14 a barrel, a decline of roughly 0.2%, from intraday highs above $97. Brent crude, the international benchmark, still advanced about 1.2% to close at $108.65 per barrel — its highest finish since July 2022.
The geopolitical backdrop stems from an ongoing conflict between the United States and Iran, now approaching its fourth week. Iranian forces struck Qatar’s liquefied natural gas production infrastructure overnight Wednesday, wiping out approximately 17% of output, and separately targeted a Saudi refinery in the Red Sea. The attacks rattled energy markets globally and amplified inflationary concerns that had already been elevated before hostilities began.
Those concerns were underscored Wednesday when the Federal Open Market Committee voted to hold the federal funds rate steady in the 3.50%–3.75% range and revised its “dot plot” to signal just one rate cut for the remainder of 2026 — a hawkish downshift from prior expectations of multiple reductions this year. Fed Chair Jerome Powell noted that higher energy prices carried significant implications for the inflation path. “What happens in the Middle East will be a big factor,” Powell said, adding that the central bank would not be able to entertain rate cuts if inflation continues to accelerate, as reported by TheStreet. CME FedWatch data showed markets all but abandoning expectations for any 2026 cut in the wake of the statement.
Strategists at Macquarie went further, telling clients this week that the firm believes inflationary pressures building from the oil price shock will ultimately force the Federal Reserve to raise interest rates, most likely in the first half of 2027. The view is a striking departure from the rate-cutting consensus that defined the prior year and reflects a broader reassessment of the policy landscape as energy costs filter through to consumer prices.
Among sectors, energy was the standout beneficiary of elevated crude prices. The S&P 500 Energy sector gained 0.96%, with Chevron rising 1.43% and ExxonMobil advancing 0.40%. Canadian Natural Resources surged 3.01%, extending a gain of more than 60% over the past six months. Conversely, the Materials sector led declines, falling 1.75%, followed by Industrials down 1.10%.
Technology stocks faced dual headwinds from rising interest rates and disappointing corporate guidance. Micron Technology tumbled despite reporting better-than-expected fiscal second-quarter results — earnings of $12.20 per share on revenue of $23.86 billion — as investors fixated on the company’s expanded capital expenditure plans for AI infrastructure. Nvidia and Broadcom each fell more than 2%. Alibaba Group declined sharply on disappointing earnings. Boeing dropped 3.63%, falling back below $200 per share, weighed down by broad aerospace selling pressure. Newmont, the gold mining company, fell roughly 7% as bullion prices slid sharply, erasing a safe-haven bid that had built earlier in the month. On the brighter side, Five Below jumped nearly 10% after the specialty retailer reported fourth-quarter revenue of $1.73 billion and adjusted earnings per share of $4.31, both above Wall Street estimates, according to 247 Wall St.
The CBOE Volatility Index, Wall Street’s “fear gauge,” surged 12.2% to close at 25.09 — its highest level in over two years and a decisive breach of the psychologically significant 20 threshold. Treasury yields also climbed, with the 10-year note trading around 4.26%, as bond investors priced in a higher-for-longer rate regime. The Russell 2000 small-cap index, which is more sensitive to domestic rate conditions, managed to eke out a gain of 0.65% at the close — the only major index to finish in positive territory — after benefiting disproportionately from the Hormuz news and the pullback in crude.
The opening of the Strait of Hormuz remains a stated top priority for Washington. Mike Sommers, president and chief executive of the American Petroleum Institute, told CNBC on Thursday that “there is just no substitute right now” for restoring the flow of oil through the waterway. Until that occurs, analysts expect energy prices to remain elevated and to exert continued upward pressure on inflation expectations — complicating the Federal Reserve’s path and sustaining the heightened volatility that has characterized trading for most of March.
