Oil prices rise 5%, and Dow drops 500 points after Trump says ceasefire with Iran is 'over'
Coeur d'Alene Press | UPDATED 2 weeks, 3 days AGO
NEW YORK (AP) — Oil prices are rising, and stock markets are dropping worldwide Wednesday after President Donald Trump raised doubts about the temporary truce in the war with Iran.
The S&P 500 fell 0.3% after Trump said the agreement to pause fighting was “over,” though he added that he would allow negotiations to continue. The Dow Jones Industrial Average was down 562 points, or 1%, as of 1:36 p.m. Eastern time, and the Nasdaq composite was 0.1% higher, thanks to gains for several big AI stocks including Nvidia.
The action was stronger in the oil market, where the price for a barrel of Brent crude climbed 5.8% to $78.43. That’s well below its peak from earlier in the war, when the price for the most actively traded contract reached nearly $120. But the jump is unsettling because oil prices had just dropped back to where they were before the war.
The worry is that a continuation of the war will block the Strait of Hormuz and prevent the delivery of crude from the Persian Gulf to customers worldwide. That could worsen inflation, which economists expected would ease with oil prices, and in turn force the Federal Reserve and other central banks to raise interest rates.
Higher rates can keep a lid on inflation, but they also slow the economy and hurt prices for all kinds of investments.
Losses for stock markets in Europe accelerated, and oil prices climbed immediately after Trump said, “For me, I think it’s over” about the status of the ceasefire. He added that U.S. representatives can continue negotiations, “but I think they’re wasting their time.”
Trump later said the United States was preparing for another night of strikes against Iran.
On Wall Street, companies with big fuel bills fell sharply. American Airlines lost 3.3%, and United Airlines fell 2.1%.
Stocks of companies in the housing industry were also weak. They were hurt by worries that rising Treasury yields in the bond market will lead to higher rates for mortgages and chill the industry.