Tech Stocks Drop as Oil Rises on Iran War Risks: Markets Wrap

Wall Street traders drove stocks lower ahead of the weekend on concern that a protracted war in Iran will keep oil prices elevated, fueling a simultaneous increase in inflation and a slowdown in growth.

The nearly 1.5% drop in the S&P 500 put the gauge on course for its longest streak of weekly losses since 2022. The Nasdaq 100 fell into correction territory after a 10% decline from its peak. Brent hit $112 a barrel. Treasury 10-year yields climbed toward their highest since July. The yen weakened to 160 for the first time since 2024, raising intervention risks.

The US and Israel bombed several nuclear targets and steel facilities in Iran on Friday, as Tehran continued to launch strikes across the Persian Gulf and rebuffed President Donald Trump’s increasingly insistent demands to end the conflict.

The attacks came after Trump pushed back his deadline for Iran to agree to reopen the Strait of Hormuz or face strikes on its power plants.

“The logic of ‘escalation to de-escalate’ continues to play out, and this will dampen risk appetites ahead of the weekend,” said Marc Chandler at Bannockburn.

The Trump administration is signaling to allies that it has no immediate plans for a ground invasion of Iran, even as it deploys thousands of troops to the Middle East, people familiar with the matter said.

“The diplomatic dissonance between the US and Iran dismayed investors,” said Doug Beath at Wells Fargo Investment Institute. “By the end of the week, risk appetite could not withstand the fog of war.”

Heightened uncertainty and headline-driven swings are pushing investors to cut risk, hedge more, and tighten liquidity, according to Mark Hackett at Nationwide.

“Markets are reacting more to positioning and volatility than fundamentals,” he said. “The macro and earnings backdrop is still supportive and expectations have reset, but without clear resolution on the conflict and stabilization in energy markets, it’s hard to see a sustained move higher.”

Goldman Sachs Group Inc.’s trading desk is warning investors not to turn bearish on US stocks, saying current positioning leaves the market vulnerable to a short squeeze if geopolitical tensions ease.

As the war in the Middle East drives up gasoline prices, data showed US consumer sentiment slid to a three-month low in March and year-ahead inflation expectations jumped.

Corporate Highlights:

Carnival Corp. cut its full-year profit outlook as surging crude prices are driving up fuel costs.
Anthropic PBC is considering going public as soon as in October, according to people familiar with the matter, as the artificial intelligence company races with rival OpenAI Inc. to hold an initial public offering.
Oaktree Capital Management is meeting all redemption requests it received for a $7.7 billion private credit fund aimed at retail investors, siding with managers that have decided against enforcing a cap on withdrawals.
Pernod Ricard SA and Brown-Forman Corp., the owner of Jack Daniel’s whiskey, are discussing a merger as the alcoholic drink companies look at ways to consolidate amid an industry downturn.

What Bloomberg Strategists say…

“Treasury yields are close to entering a precarious zone for stocks, and it will be harder to shrug the move off this time.”

—Tatiana Darie, Macro Strategist, Markets Live. For the full analysis, click here.

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