Stocks Extend Weekly Losses as Oil Surge and Geopolitical Risks Drive Risk-Off Trade

The stock market closed out a difficult week with another sharp decline, as rising oil prices and escalating geopolitical tensions fueled broad-based selling. The S&P 500 dropped 1.7%, the Nasdaq Composite fell 2.2%, and the Dow Jones Industrial Average declined 1.7%, leaving all three major indices firmly lower for the week.

Selling pressure intensified as the session progressed, with markets reacting to mounting uncertainty surrounding the conflict involving Iran. There was little clarity on whether meaningful negotiations between the U.S. and Iran are underway. Instead, reports from The Wall Street Journal indicated that the Pentagon is considering deploying an additional 10,000 ground troops to the Middle East, reinforcing concerns that the situation could escalate into a broader conflict.

Those concerns were compounded by earlier reports that Gulf states are preparing for possible military involvement. As a result, markets head into the weekend with heightened anxiety over the risk of a prolonged and expanding conflict.

Oil prices surged again, with WTI crude settling up 5.4% at $99.51 per barrel—effectively erasing earlier-week declines after Monday’s sharp pullback. The energy sector rose 1.9% on the day and finished the week up 6.3%, standing out as one of the few areas of strength.

Defensive sectors also attracted some rotational buying. Consumer staples gained 0.8%, while utilities added 0.6%. Entergy was the top-performing S&P 500 component after expanding its agreement with Meta Platforms to support data center infrastructure. Meanwhile, Brown-Forman extended its recent rally on acquisition interest from Pernod Ricard.

Outside of these pockets, weakness was widespread. The consumer discretionary sector led declines, falling 3.1% as nearly all of its components moved lower. Travel-related names were hit particularly hard, with Norwegian Cruise Line and Carnival under pressure amid rising fuel costs and cautious guidance. Mega-cap weakness compounded the losses, with Amazon and Tesla both declining sharply.

Mega-cap selling extended across the market. Communication services (-2.3%) and information technology (-2.0%) were both dragged lower as all “Magnificent Seven” stocks finished in the red. Meta Platforms was the worst performer in the group, continuing its slide following a high-profile legal ruling.

Within technology, software names remained a major source of weakness. Datadog and other enterprise software companies led declines, with the iShares GS Software ETF falling 3.6%.

Financials also came under pressure, with nearly every component finishing lower. Citigroup lagged after reports—later denied—suggested potential acquisition activity. Crypto-linked names followed Bitcoin lower, with Coinbase Global and Robinhood Markets posting steep losses as the cryptocurrency dropped roughly 4%.

Risk aversion extended into smaller-cap stocks, as the Russell 2000 and S&P MidCap 400 fell 1.8% and 1.6%, respectively. Meanwhile, the CBOE Volatility Index surged 13.3% to 31.08, reflecting a sharp rise in market anxiety heading into the weekend.

In aggregate, the session marked a continuation of the dominant themes driving markets since the onset of the Iran conflict: higher energy prices, tightening financial conditions, and deteriorating risk sentiment. With the major indices now trading further below their 200-day moving averages, the technical backdrop remains weak. Absent a meaningful de-escalation in geopolitical tensions or stabilization in oil prices, the near-term outlook continues to skew to the downside.

Our FTinvest 11 model portfolio slipped 0.14% to close at 951.69, marking a relatively quiet session as the portfolio continues to consolidate following its recent rebound. The index remains below its all-time high of 1,039.51, with momentum stabilizing after the earlier correction in March.

Based on the start-of-year level of 928.18, FTinvest 11 is now up approximately +2.53% year-to-date, maintaining a positive return despite recent volatility. The portfolio’s steady performance reflects its disciplined, value-driven strategy as it navigates a more balanced market environment.