Stocks Slide as Oil Spike and Strait of Hormuz Tensions Pressure Markets

U.S. stocks suffered another difficult session as surging oil prices continued to weigh heavily on investor sentiment. The S&P 500 dropped 1.5%, the Nasdaq Composite fell 1.9%, and the Dow Jones Industrial Average declined 1.6%, leaving all three major indices firmly lower for the week.

Energy markets again dominated the narrative. Crude oil prices surged before the opening bell following reports that additional oil tankers had been struck in the Strait of Hormuz. Reports indicated that Iran’s new supreme leader, Mojtaba Khamenei, intends to keep the strategic waterway closed, raising fears of prolonged disruption to global energy supplies.

Adding to concerns, U.S. Energy Secretary Chris Wright stated that the U.S. Navy is not yet prepared to escort tankers through the strait, although officials hope such operations could begin by the end of the month. Until then, uncertainty around supply flows continues to support higher oil prices.

Crude oil futures climbed $8.84, or 10.2%, to settle at $95.72 per barrel. The sharp increase has amplified worries about inflation and further complicated expectations for monetary policy. According to the CME FedWatch Tool, markets are not pricing in better-than-even odds of a 25-basis-point rate cut until the December Federal Open Market Committee meeting.

While the energy sector benefited from the surge in oil prices, broader equity markets struggled. Eight of the eleven S&P 500 sectors closed lower.

Industrials led the declines, falling 2.5% as transportation companies came under pressure from rising fuel costs. Airlines and trucking firms were among the hardest hit, with Southwest Airlines and Old Dominion Freight Line posting steep losses.

Consumer discretionary stocks also lagged. Cruise operators such as Carnival Corporation dropped sharply as higher energy costs threaten travel demand and operating margins. Homebuilder stocks also weakened as expectations for delayed interest-rate cuts pushed Treasury yields higher.

Mega-cap technology stocks added to the market’s decline. Tesla was among the laggards as the broader growth sector struggled, dragging down the technology and communication services sectors. Semiconductor stocks were a particular point of weakness, with the chip sector falling sharply during the session.

Financial stocks also faced selling pressure after reports that major asset managers may limit withdrawals from certain private credit funds. Morgan Stanley was among the firms mentioned in the reports, which fueled concerns about liquidity pressures in parts of the private credit market.

Defensive sectors offered limited support. Utilities and consumer staples posted modest gains as investors rotated toward more stable areas of the market, though health care stocks still finished lower.

Small- and mid-cap stocks underperformed large caps, reflecting the market’s broader risk-off tone. The Russell 2000 and the S&P MidCap 400 both fell 2.1%.

With oil prices continuing to surge and geopolitical tensions escalating, volatility across financial markets remains elevated. Investors will now turn their attention to the upcoming release of the Personal Consumption Expenditures Price Index—the Federal Reserve’s preferred inflation gauge. Although the report will not yet reflect the recent spike in energy prices, traders will be watching closely for any signs that inflation pressures could intensify further in the months ahead.

Our FTinvest 11 model portfolio declined 0.53% to close at 965.48, continuing the recent downward stretch as the portfolio moves further away from its all-time high of 1,039.51. The index has now recorded several consecutive sessions of losses, reflecting ongoing market pressure and risk-off sentiment in early March.

Despite the pullback, FTinvest 11 remains comfortably above its levels from the beginning of the year and retains a solid year-to-date gain. The portfolio’s disciplined, value-driven framework continues to guide its positioning as it navigates this corrective phase following the strong rally earlier in 2026.