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Financial Markets 03/27 15:27
NEW YORK (AP) -- U.S. stocks deepened their drops Friday as Wall Street
finished off a fifth straight losing week, its longest such streak in nearly
four years.
The S&P 500 fell 1.7% to close its worst week since the war with Iran began.
The Dow Jones Industrial Average lost 793 points, or 1.7%, and fell more than
10% from its record set last month, while the Nasdaq composite sank 2.1%.
The losses were a break from Wall Street's pattern this week, where the U.S.
stock market flip-flopped from gains to losses each day as hopes rose and fell
about a possible end to the war.
Moments after the U.S. stock market finished trading on Thursday, President
Donald Trump offered more potential for optimism. He extended a self-imposed
deadline to "obliterate" Iran's power plants to April 6 if it doesn't fully
allow oil tankers to exit the Persian Gulf through the Strait of Hormuz to the
open ocean.
Oil prices eased immediately afterward in a sign of hope that some normalcy
may return to the strait. It was similar to the relief that swept markets
Monday, when oil prices slid 10% after Trump announced the first delay to his
deadline for clearing the Strait of Hormuz.
But oil prices resumed their climb as trading moved westward Friday from
Asia to Europe and back to Wall Street. Despite Trump's latest announcement,
fighting continued in the Middle East. Iran gave no signs of backing down, and
Israel threatened to "escalate and expand" its attacks on Iran.
"The diplomatic dissonance this week between the U.S. and Iran dismayed
investors," said Doug Beath, global equity strategist at Wells Fargo Investment
Institute. "By the end of the week, risk appetite could not withstand the fog
of war."
"Any further statements by Trump about a deal are white noise to the
markets," Jim Bianco, president and macro strategist at Bianco Research, wrote
in a social media post. "Only if the IRANIANS say the talks are going well will
it impact markets."
The price for a barrel of Brent crude oil climbed 3.4% to settle at $105.32.
That's up from roughly $70 just before the war began. Benchmark U.S. crude rose
5.5% to settle at $99.64 per barrel.
The fear in financial markets is that the war will disrupt the Persian
Gulf's energy industry for a long time. That could keep enough oil and natural
gas out of the world's markets to send a punishing wave of inflation through
the global economy.
Not only would it raise prices for drivers buying gasoline, it could push
businesses that use any trucks, ships or planes to move their products to raise
their own prices. It would also make electricity from gas-fired power plants
more expensive.
If the war continues until the end of June, strategists at Macquarie say the
price of oil could reach $200 per barrel. The record is just above $147, set
during the summer of 2008. That's when Iran's testing of missiles, including
one that could reach Israel, and strong demand for oil from China helped send
prices spiking despite the Great Recession.
High gasoline prices and the war are already hitting confidence among U.S.
consumers, whose spending makes up the bulk of the economy. Sentiment among
them fell slightly more in March from February than economists expected,
according to a survey by the University of Michigan.
On Wall Street, most stocks fell, including three out of every four in the
S&P 500. The index, which is the main measure of the U.S. stock market's
health, is 8.7% below its all-time high set in January.
Big Tech stocks were among the heaviest weights on the market, including
drops of 4% for Amazon, 4% for Meta Platforms and 2.2% for Nvidia.
Companies selling things that are not essentials, which customers could stop
buying if they're spending much more on gasoline, also sank sharply. Norwegian
Cruise Line Holdings lost 6.9%, Starbucks dropped 4.8% and Chipotle Mexican
Grill sank 4.1%.
All told, the S&P 500 fell 108.31 points to 6,368.85. The Dow Jones
Industrial Average dropped 793.47 to 45,166.64, and the Nasdaq composite sank
459.72 to 20,948.36.
In stock markets abroad, indexes fell in Europe following a mixed finish in
Asia.
In the bond market, which has helped influence Trump's actions in the past,
Treasury yields swiveled.
The yield for the 10-year Treasury rose as high as 4.48% before pulling back
to 4.43%. That's up from 4.42% late Thursday and from just 3.97% before the war
began. The rise has already sent rates jumping for mortgages and for other
loans taken by U.S. households and businesses, slowing the economy.
High Treasury yields and disruption in the bond market were big factors that
Trump named a year ago when he backed off his initial threats for global
tariffs made on "Liberation Day." The moves caused critics to allege Trump
always chickens out, or "TACO," if financial markets show enough pain.
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AP Business Writers Chan Ho-him and Matt Ott contributed.
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This version corrects the percentage decline in the S&P 500 index in the
summary and first paragraph to 1.7%.
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