US Stocks Sink; Nasdaq 100 and Dow Industrials Enter Correction

Traders at the New York Stock Exchange. Photographer: Michael Nagle/Bloomberg Photo by Michael Nagle /Bloomberg

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(Bloomberg) — The selloff in US stocks accelerated on Friday, as traders fled equities on fears that a surge in oil prices sparked by the escalating Iran war will cripple the global economy. 

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The S&P 500 finished 1.7% lower in New York, capping its fifth straight weekly drop — the longest such streak since 2022. The retreat pushed the US benchmark to its lowest in more than seven months. The tech-heavy Nasdaq 100 Index slid 1.9%, bringing its decline from its October peak to more than 10%, and entered what’s commonly defined as a correction. The Dow Jones Industrial Average also landed in correction territory as it tumbled 1.7%.

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Brent crude oil prices jumped to $114 per barrel as the US and Israel bombed Iranian nuclear and steel facilities on Friday, while Iran retaliated across the Persian Gulf. The attacks came hours after President Donald Trump moved back his deadline for Iran to agree to reopen the Strait of Hormuz or face attacks on its power infrastructure.

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“I think stocks are starting to show signs of exhaustion, losing hope that a resolution to the war is likely to be forthcoming,” said Gina Martin Adams, chief market strategist at HB Wealth Management. “The consensus view was clearly that war would be swiftly resolved and that consensus is quite clearly starting to cave to the pressure of time.” 

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Among S&P 500 sectors, consumer discretionary stocks were the biggest losers, with the group falling about 3%, while the communications, technology and financial sectors were down more than 2%. The broader index was off nearly 9% from its late January record, nearing correction territory itself.

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The week started on a positive note, with oil prices paring gains and stocks mounting a rebound after Trump postponed military strikes on Iranian energy sites for five days and claimed productive conversations on a “total resolution.” Those moves were short-lived, as diplomatic efforts between the US and Iran bore little fruit while the conflict raged on. 

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“The best-case scenario didn’t play out,” said Brian Mulberry, chief market strategist at Zacks Investment Management. “Now it’s about the intermediate and worst-case scenario. The worst case for stocks would be oil over $100 a barrel by July.”

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While Secretary of State Marco Rubio told reporters on Friday that the US war in Iran will take “weeks not months” and that the US can achieve objectives without sending ground troops to Iran, concern about the fallout from a protracted war lingered. Earlier, the Wall Street Journal reported that the US is weighing sending additional ground troops to the Middle East.

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Inflation Worries

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Meanwhile, surging oil prices are stoking inflation worries and undercutting the case for the Federal Reserve to lower interest rates anytime soon, a dynamic that has helped push up Treasury yields this week. Benchmark 10-year yields touched 4.48% on earlier Friday, their highest level since mid-2025, before paring the move. 

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Elevated Treasury yields are often seen as a hindrance to stocks, as they dim the allure of equities compared to government bonds while raising the cost of capital for companies.