U.S. Stock indexes declined Friday, extending a three-week losing streak as oil prices remained elevated amid ongoing geopolitical tensions in the Middle East. The Dow Jones Industrial Average closed down 119.43 points, or 0.26%, at 46,558.47, while the S&P 500 fell 0.61% to 6,632.19. The Nasdaq Composite dropped 0.93%, closing at 22,105.36.
The market downturn followed a week of volatility fueled by concerns over potential disruptions to global energy supplies. West Texas Intermediate futures rose 2% to $98 a barrel and Brent crude futures moved back above $100 a barrel, levels not seen since August 2022, according to market data. The surge in oil prices has reignited fears of persistent inflation, complicating the outlook for Federal Reserve monetary policy.
Traders have scaled back expectations for interest rate cuts this year, reassessing economic data in light of the rising energy costs. The Personal Consumption Expenditures (PCE) index, released Friday by the Bureau of Economic Analysis, showed headline prices rose 0.3% month over month in January, prior to the escalation of current conflicts. Core PCE, excluding volatile food and energy prices, increased 0.4% during the same period.
Economic growth also slowed more than initially estimated in the fourth quarter of 2025, with real gross domestic product revised down to 0.7% growth. This revised figure adds to concerns about the overall health of the U.S. Economy and the potential for a slowdown.
The escalating conflict in the Middle East, specifically tensions surrounding the Strait of Hormuz, has been identified as a key driver of market uncertainty. Disruptions to oil transport through this critical waterway could further exacerbate supply shortages and push prices higher. Oil markets are suffering a major supply shortage due to an Iranian blockade of the Strait of Hormuz, a trading route that facilitates the transport of about one-fifth of the global oil supply.
The S&P 500’s decline to 6,632.19 marked its lowest level of 2026 to date. The Dow Jones fell nearly 2% for the week, and the Nasdaq dropped about 1.3%, signaling broad market weakness.
President Trump has offered mixed messages regarding potential responses to rising oil prices and related economic challenges, leaving the market awaiting further clarity on the administration’s strategy.
