Stocks drop after oil spikes to its highest price since the summer of
2024
[March 06, 2026] By
STAN CHOE
NEW YORK (AP) — Stocks sank on Wall Street Thursday after the price of
oil spiked to its highest level since the summer of 2024 because of the
war with Iran.
The S&P 500 fell 0.6% and erased what had been a small gain for the year
so far. The Dow Jones Industrial Average briefly dropped more than 1,100
points before finishing with a loss of 784, or 1.6%. The Nasdaq
composite slipped 0.3%.
The losses came as financial markets around the world keep following the
cue of oil prices. Sharp increases there are raising worries that a
long-term surge could grind down the global economy, exhaust households’
ability to spend and push interest rates higher.
The price for a barrel of benchmark U.S. crude shot up 8.5% Thursday to
settle at $81.01 per barrel. Brent crude, the international standard,
climbed 4.9% to $85.41 per barrel and is likewise near its highest price
since 2024.
Oil prices gave back some of those gains later in the day, which helped
stocks in the U.S. moderate their losses at the end of trading. But
worries nevertheless remain high about how long disruptions will last
for oil production because of the escalating war with Iran.
Prices at U.S. gasoline pumps have already leaped because of them. The
average price for a gallon is $3.25, up 9% from $2.98 a week ago,
according to auto club AAA.
If oil prices spike further, like to $100 per barrel, and stay there,
some analysts and investors say it could be too much for the global
economy to withstand. Uncertainty about what will happen has caused
frenetic swings across financial markets this week, sometimes hour by
hour.
Much will depend on what happens with the Strait of Hormuz. Roughly a
fifth of the world’s oil typically sails through the narrow waterway off
Iran’s coast.
To be sure, the U.S. stock market has a history of bouncing back
relatively quickly following conflicts in the Middle East and elsewhere,
as long as oil prices don't jump too high for too long. That has many
professional investors suggesting patience and riding through the
market’s swings.
“While further escalation remains a risk, we think the more likely
outcome is an increase in market risk aversion that likely lasts only a
short time until investors can see a winding down of hostilities,”
according to Scott Wren, senior global market strategist at Wells Fargo
Investment Institute.
The S&P 500 is down only 0.7% for the week so far, despite its sharp
swings, as gains for Big Tech stocks and oil producers have helped to
blunt losses across the rest of the market.
Stocks of airlines fell to some of the U.S. market’s worst losses again
on Thursday. Higher oil prices are increasing their already big fuel
bills, while the war has left hundreds of thousands of passengers
stranded across the Middle East.
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Anthony Matesic works on the floor at the New York Stock Exchange in
New York, Thursday, March 5, 2026. (AP Photo/Seth Wenig)
 American Airlines lost 5.4%, United
Airlines fell 5% and Delta Air Lines sank 3.9%.
Stocks of smaller companies, meanwhile, took heavy hits. That’s
typical when worries are growing about the strength of the economy
and about interest rates rising. The Russell 2000 index of the
smallest stocks fell a market-leading 1.9%.
Wall Street’s drop would have been worse if not for Broadcom. The
chip company’s stock rose 4.8% after it reported stronger profit and
revenue for the latest quarter than analysts expected. It’s one of
Wall Street’s most influential stocks because it’s one of the
biggest by total value, and CEO Hock Tan said it benefited from a
74% jump in revenue for AI chips.
All told, the S&P 500 fell 38.79 points to 6,830.71. The Dow Jones
Industrial Average dropped 784.67 to 47,954.74, and the Nasdaq
composite slipped 58.50 to 22,748.99.
In the bond market, Treasury yields climbed as rising oil prices put
more upward pressure on inflation, which could keep the Federal
Reserve from cutting interest rates.
The yield on the 10-year Treasury rose to 4.13% from 4.09% late
Wednesday and from just 3.97% before the war with Iran started.
The Fed could keep interest rates high to keep a lid on inflation.
But high interest rates would also keep it more expensive for U.S.
households and companies to borrow money, which would grind down on
the economy.
The central bank had indicated it planned to resume its cuts to
interest rates later this year, in hopes of giving a boost to the
job market and economy. Because of the war and higher oil prices,
traders have pushed their forecasts further into the summer for when
the Fed could begin cutting rates again.
In stock markets abroad, indexes rebounded in Asia following
historic losses the day before. South Korea’s Kospi soared 9.6% to
recover much of its 12.1% plunge from Wednesday, which was its worst
drop ever.
But indexes fell in Europe as oil prices began to accelerate.
France’s CAC 40 fell 1.5%, and Germany’s DAX lost 1.6%.
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AP Writers Kim Tong-hyung and Elaine Kurtenbach contributed.
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