US stocks extended their decline on Friday as traders worried that surging oil prices triggered by escalating hostilities in Iran would weigh on the global economy. The S&P 500 closed down 1.7%, marking its fifth consecutive weekly loss—the longest such streak since 2022—and hitting its lowest level in over seven months. The technology-heavy Nasdaq 100 Index fell 1.9%, dropping more than 10% from its October peak and entering what is commonly defined as a correction. The Dow Jones Industrial Average also entered correction territory after declining 1.7%. The VIX volatility index closed above 30 for the first time since April. Brent crude rose to $114 per barrel after the US and Israel conducted airstrikes on Iranian nuclear facilities on Friday, prompting retaliatory actions from Iran in the Persian Gulf. One market strategist noted that equity markets are beginning to show signs of strain as hopes for a swift resolution to the conflict fade. Among S&P 500 sectors, consumer discretionary led the declines, while communications, technology, and financial sectors each fell more than 2%. The S&P 500 Industrials Index dropped 1.3%, down nearly 11% from its March 2 high. Another strategist commented that the most optimistic scenario has not materialized, and markets are now pricing in intermediate and worst-case outcomes. For equities, the worst-case scenario would involve oil prices rising above $100 per barrel by July. A senior US official stated that military engagement with Iran would last "weeks, not months," and reiterated that no ground troops would be necessary. However, concerns persist that the conflict could be prolonged. Reports indicated that consideration is being given to deploying up to 10,000 additional military personnel to the Middle East. Rising oil prices have heightened inflation concerns and reduced the likelihood of near-term interest rate cuts by the Federal Reserve, contributing to a rise in US Treasury yields this week. At the close, the S&P 500 was down 1.7% at 6,368.85. The Dow Jones Industrial Average fell 1.7% to 45,166.64. The Nasdaq Composite declined 2.2% to 20,948.36. The Nasdaq 100 dropped 1.9% to 23,132.77. The Russell 2000 decreased 1.8% to 2,449.695.
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