By Sabrina Escobar
War on the Brain. Thursday was a tough day for U.S. stocks. Surging oil prices weighed on investor sentiment, pulling equities lower.
Oil surpassed $80 a barrel for the first time in months, reflecting concerns over how escalating military action in the Middle East would affect global markets.
West Texas Intermediate crude oil futures finished the day up 8.5% to $81.01 a barrel -- its biggest one-day percentage gain since May 14, 2020, according to Dow Jones Market Data. Brent crude oil futures, the international benchmark, rose 4.9% to $85.41 a barrel.
Following the U.S. and Israel's joint military action in Iran over the weekend, Tehran has effectively closed the Strait of Hormuz, the narrow passage through which roughly 20% of the world's oil and gas supply passes.
Earlier this week, the U.S. promised tankers protection through the Persian Gulf, if necessary, assuaging some of the market's concerns about the effects of a Hormuz chokehold. But today an unconfirmed Iranian state media report of a strike on an oil tanker reignited those worries and sent oil prices spiking.
"The continuing U.S.-Israel military operation in Iran has driven oil prices up by close to 18% from end-Feb," writes Stephen Juneau, U.S. economist at BofA Securities. "While our base case is for the conflict to be short-lived, a longer conflict would likely lead to a more sustained increase in oil. That would put upward pressure on headline, core inflation and inflation expectations in the months ahead."
The S&P 500 closed 0.6% lower today while the Nasdaq Composite fell 0.3%. The Dow Jones Industrial Average was especially hard-hit, shedding 785 points, or 1.6%. My colleague Connor Smith explains:
The Dow was suffering from a mix of sector exposure and how it weighs individual members. The Dow has a higher exposure to industrials, healthcare, consumer staples, and financials than the S&P and a lower exposure to technology. That was hurting the Dow on a day when energy and tech were the only S&P 500 sectors trading higher.
Tomorrow brings a different topic for investors to worry about: February's jobs report. More on that in our calendar below.
The Hot Stock: Trade Desk +18.4% The Biggest Loser: Ciena -12.9%
Best Sector: Energy +0.6% Worst Sector: Consumer Staples -2.4%
Software Gets a Break
Investors fretting about Thursday's oil-driven selloff would do well to remember that this, too, shall pass. Just look at software stocks.
The sector went from one of the most hated -- shedding 12% in January alone -- to staging an impressive comeback. The iShares Expanded Tech-Software Sector ETF is up 10% in the past month.
Software stocks sold off over fears that tools like Anthropic's Claude would steal market share from software vendors. Those concerns haven't entirely dissipated, but the panic has started to ebb as investors conclude that some software stocks are better insulated from the AI risk than others, particularly those that are deeply embedded into company processes.
"It turns out the approach can't simply cut out existing software makers and their tightknit relationships with business customers," writes my colleague Adam Levine. He thinks Salesforce is one of those firms well positioned to come out stronger on the other end of the AI reckoning, noting that the company is starting to see rapid growth in the sale of its own AI agents.
Many bargain hunters have come to the same conclusion and have started taking chances on beaten-down names. Barron's Jacob Sonenshine writes:
Anthropic, which provides Claude, reportedly has $19 billion of annual recurring revenue. OpenAI, the parent company of ChatGPT, reportedly has over $20 billion. They're both growing rapidly: Their combined ARR is nearly 3% of the $1.43 trillion of total U.S. software spending Gartner expects for this year. So it likely won't be long before lost market share shows up in software incumbents' earnings or guidance.
The Calendar
The Bureau of Labor Statistics releases the jobs report for February. Economists forecast a 60,000 increase in nonfarm payrolls, after a 130,000 gain in January. The unemployment rate is expected to remain unchanged at 4.3%. January's jobs growth was the largest since December 2024, allaying fears about a weakening labor market.
Also tomorrow, the Census Bureau reports retail and food service sales for January. The consensus call is for sales to be flat month over month, after also being virtually unchanged in December.
-- Dan Lam
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Now.
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(END) Dow Jones Newswires
March 05, 2026 19:55 ET (00:55 GMT)
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