Stocks rose on Friday, while oil prices pulled back as investors awaited further developments in the Iran war.
The Dow Jones Industrial Average rose 301 points, or 0.7%. The S&P 500 gained 0.5% along with the Nasdaq Composite.
The three major averages are tracking for losses on the week. The S&P 500 is on pace for a 1% decline, putting it on pace to see its first three-week losing streak in about a year. The 30-stock Dow is heading for a 1.7% slide, while the tech-heavy Nasdaq is off 0.3% week to date.
The recent rally in oil prices reversed course on Friday. West Texas Intermediate crude futures retreated 3% to around $92 per barrel, while Brent futures moved lower by 2% to $98 a barrel. Brent had closed above $100 for the first time since August 2022 on Thursday.
Stocks are coming off a losing session as oil spiked in the previous session after Iran’s new Supreme Leader Mojtaba Khamenei said that the Strait of Hormuz, a critical route, should remain shut as a “tool to pressure the enemy.” Traffic in the Strait has virtually been halted since the U.S. and Israel launched strikes on Iran at the end of February, leaving investors anxiously awaiting progress on that front.
On Friday, Defense Secretary Pete Hegseth dismissed concerns that the passageway’s closure in the wake of the war breaking out would remain a problem, saying during a press briefing at the Pentagon, “We have been dealing with it, and don’t need to worry about it.”
Higher oil prices, along with several other key hurdles in the market, have been causing investors pain, according to Chris Toomey, managing director at Morgan Stanley Private Wealth Management. Rising crude prices and growing inflation fears have also dampened investors’ expectations for Federal Reserve interest rate cuts this year.
“You’ve got the [artificial intelligence] buildout, you’ve got private credit … and this energy situation,” he said on CNBC’s “Closing Bell.” “I think the energy situation is the thing that we’re most concerned about.”
Toomey added that if Strait of Hormuz sees sustained impairment beyond two or three months, that “becomes a real problem.”
Investors are weighing the latest data from the Fed’s preferred inflation gauge as well. The personal consumption expenditures price index rose 0.3% in January, coming in line with expectations. Year over year, the headline reading showed an increase of 2.8%, which was slightly below the 2.9% economists polled by Dow Jones had called for.
Core PCE, which excludes energy and food prices, came in as expected at 0.4% for the month and 3.1% from a year earlier.
However, economic growth in the fourth quarter of 2025 was much slower than expected, as gross domestic product rose at annual rate of 0.7% in the period. That revision was down significantly from the prior estimate of 1.4% and well below the Dow Jones forecast for 1.5%.
