For now, the price of oil has jumped, but it’s still lower than it was earlier this year. “This is an economic shock that nobody really needs, but it is one that seems more like a shock to sentiment than to the fundamentals of the economy,” said Brian Jacobsen, chief economist at Annex Wealth Management.
That in turn sent US stocks to a loss that was notable in size but outside their top 15 for the year so far.
Companies that use a lot of fuel as part of their business and need their customers feeling confident enough to travel fell to some of the sharpest losses. Cruise operator Carnival dropped 4.9 per cent. United Airlines sank 4.4 per cent, and Norwegian Cruise Line Holdings fell 5 per cent.
They helped overshadow gains for US oil producers and other companies that could benefit from increased fighting between Israel and Iran.
Exxon Mobil rose 2.2 per cent, and ConocoPhillips gained 2.4 per cent because the leaping price of crude portends bigger profits for them.
Contractors that make weapons and defence equipment also rallied. Lockheed Martin, Northrop Grumman and RTX all rose more than 3 per cent.
The price of gold climbed as investors searched for safer places to park their cash. An ounce of gold added 1.4 per cent.
Often, prices for Treasury bonds will likewise rise when investors are feeling nervous. That’s because US government bonds have historically been seen as some of the safest options around. But Treasury prices fell Friday, which in turn pushed up their yields, in part because of worries that a spike in oil prices could drive inflation higher.
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Inflation has remained relatively tame recently, and it’s near the Federal Reserve’s target of 2 per cent, but worries are high that it could be set to accelerate because of President Donald Trump’s tariffs.
That sent the yield on the 10-year Treasury up to 4.41 per cent from 4.36 per cent late Thursday. Higher yields can tug down on prices for stocks and other investments, while making it more expensive for US companies and households to borrow money.
A better-than-expected report Friday on sentiment among US consumers also helped drive yields higher. The preliminary report from the University of Michigan said sentiment improved for the first time in six months after Trump put many of his tariffs on pause, while US consumers’ expectations for coming inflation eased.
On Wall Street, Adobe fell 5.3 per cent even though the company behind Photoshop reported a stronger profit for the latest quarter than Wall Street expected. Analysts called it a solid performance but said investors may have been looking for some bigger revenue forecasts for the upcoming year.
All told, the S&P 500 fell 68.29 points to 5,976.97. The Dow Jones Industrial Average dropped 769.83 to 42,197.79, and the Nasdaq composite sank 255.66 to 19,406.83.
In stock markets abroad, indexes slumped across Europe and Asia. France’s CAC 40 lost 1 per cent, and Germany’s DAX dropped 1.1 per cent for two of the larger losses.
