S&P 500 Slips again as Oil Spikes – Markets Eye Third Losing Week amid Iran Conflict

CNBC, New York Post, Bloomberg, Investor’s Business Daily, Reuters, Market Watch, and the Wall Street Journal contributed to this report.

Stocks slid Friday as oil kept climbing and traders grew skittish about how long the Iran fight might drag on. The broad-based index gave up roughly 0.3%, the tech-heavy Nasdaq Composite dropped about 0.7%, and the Dow Jones Industrial Average was essentially flat – leaving the S&P on track for about a 1.3% weekly loss and a third straight losing week.

Energy was the headline. West Texas Intermediate hovered near $96 a barrel while Brent popped above $100, a level it hadn’t closed above since August 2022 – a jump that’s keeping investors uneasy about inflation and growth.

The market’s mood darkened after Iran’s new leadership signaled it could keep the critical Strait of Hormuz shut as leverage – comments that sent oil and risk assets reeling. At the same time, US Defense Secretary Pete Hegseth tried to tamp down fears at a Pentagon briefing, saying “we have been dealing with it, and don’t need to worry about it.” The back-and-forth has left traders pricing in a longer runway for higher energy costs.

That spike in energy prices is already reshaping expectations for monetary policy. Markets and some big banks have pulled back their bets on an early Fed easing – traders now see the first cut later in the year rather than this spring, a shift that’s adding pressure to equity valuations.

On Main Street, the pinch is starting to show: higher pump prices and the prospect of persistent inflation are top reasons analysts are trimming earnings multiples and turning defensive in consumer-facing sectors. Restaurant stocks, for example, have been hit as customers tighten discretionary spending when gas and grocery bills climb. (Analysts point to value plays and premium chains that can better weather belt-tightening.)

Bottom line: the market’s short-term script is clear – oil up, nerves up. Until the Iran situation or energy prices find firmer footing, expect more choppy sessions and a tougher road for the rally to get back on track.

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