Wall Street Slides as Oil Surpasses $100 Amid Middle East Tensions and Private Credit Stress
Wall Street benchmark indices closed sharply lower on Thursday, weighed down by surging oil prices and ongoing stress in the private credit market. The Dow Jones Industrial Average fell by over 700 points, closing below the 47,000 mark for the first time in 2026. The S&P 500 and Nasdaq also declined, ending 1.6% and 1.8% lower, respectively, marking their lowest levels of the year.
Oil Prices Surge Past $100 per Barrel
Brent crude prices rose above $100 per barrel for the first time since 2022, fueled by renewed attacks on shipping in the Persian Gulf and provocative statements from Iran's new Supreme Leader, Mojtaba Khamenei. Khamenei suggested that the Strait of Hormuz remain closed as a strategy to "pressure the enemy," intensifying geopolitical concerns.
The US Dollar index strengthened to a two-month high, approaching the 100 level. Yields on the 30-year Treasury note jumped to 4.9% amid worries about rising costs related to the US-Iran conflict. A $22 billion auction of the Treasury note saw strong demand after yields climbed 20 basis points since the outbreak of tensions.
Private Credit Woes Weigh on Financial Stocks
Adding to market pressure, the $1.8 trillion private credit market showed signs of strain. Morgan Stanley joined other firms in limiting redemptions from a private credit fund, causing its stock to drop more than 4%. The KBW Bank index declined 2.5%, marking its sixth consecutive day of losses.
Corporate Moves and After-Hours Trading
In after-hours trading, Adobe shares fell 7% following a weak forecast and the announcement that CEO Shantanu Narayen will step down after 18 years leading the company.
Focus Shifts to Economic Data
Investors are now turning attention to key US economic indicators, including the PCE inflation report, the first revision of Q4 GDP, and January consumer spending data. The PCE report remains the Federal Reserve's preferred measure of inflation and could influence future monetary policy decisions.
Wall Street Futures Show Modest Gains
Despite Thursday’s losses, Wall Street futures are trading with modest gains on Friday morning, signaling cautious optimism among investors.
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