Major United States benchmarks closed lower on Friday, with key indices marking fresh lows for 2026 as surging oil prices and escalating tensions in the Iran conflict unsettled investors.
The Dow Jones Industrial Average fell 119.4 points, or 0.3%, to close at 46,558.5. The S&P 500 declined 40.4 points, or 0.6%, to finish at 6,632.2, while the Nasdaq Composite dropped 206.6 points, or 0.9%, ending the session at 22,105.4.
The S&P 500 lost 1.6% over the past week and recorded its first three-week losing streak in roughly a year. The 30-stock Dow Jones fell 2% over the same period, while the technology-heavy Nasdaq slipped 1.3%.
Energy markets continued to drive sentiment on Wall Street. Oil prices extended their rally on Friday as investors monitored developments in the conflict involving Iran and the implications for global energy supplies.
West Texas Intermediate crude futures settled 3.11% higher at US$98.71 per barrel. Brent crude futures gained 2.67% to close at $103.14 a barrel, with Brent having already pushed above the $100 mark on Thursday for the first time since August 2022.
The previous session had already seen a sharp sell-off in equities as oil prices jumped after Iran’s new Supreme Leader, Mojtaba Khamenei, said the Strait of Hormuz should remain closed as a “tool to pressure the enemy”.
The strategic waterway is one of the world’s most important energy shipping routes, carrying a large share of global oil exports.
Despite those concerns, U.S. Defence Secretary Pete Hegseth sought to downplay fears that the disruption would persist.
Speaking during a press briefing at the Pentagon on Friday, he said authorities were already managing the situation.
“We have been dealing with it, and don’t need to worry about it,” Hegseth said.
Even so, the surge in oil prices has intensified worries among investors that the global economy could face a stagflationary environment characterised by rising inflation and slower economic growth.
Those concerns have begun to reshape expectations for monetary policy in the United States.
Traders in fed funds futures markets have scaled back bets on interest rate cuts this year, with markets no longer pricing in a reduction in September, according to the CME Group FedWatch Tool.
Inflation data released on Friday showed that the personal consumption expenditures index, the Federal Reserve’s preferred inflation gauge, rose 0.3% in January on a monthly basis, matching economists’ forecasts.
At the same time, revised government data indicated that U.S. economic growth slowed more sharply than previously estimated in the fourth quarter. The revision reflected weaker consumer spending and softer business investment than initially reported.
Attention will now turn to a series of major central bank policy meetings scheduled for next week. The Federal Reserve, the Bank of Japan, the European Central Bank and the Bank of England are all set to hold policy gatherings, with most economists expecting interest rates to remain unchanged.
On the bond markets, the yield on the benchmark U.S. 10-year Treasury rose 0.5% to 4.283%, while the two-year Treasury yield slipped 0.3% to 3.729%.
