With oil shooting past $90 per barrel, its highest price since 2023, because of the Iran war and a report showing a weakened US job market, stocks dropped Friday to cap Wall Street's worst week since October.
- The Dow fell 453.19 points, or 0.9%, to 47,501.55, to finish the week 3% lower.
- The S&P 500 fell 90.69 points, or 1.3%, to 6,740.02, to close the week down 2%.
- The Nasdaq fell 361.31 points, or 1.6%, to 22,387.68, off or 1.2% for the week.
The combination of a weak economy and high inflation is a worst-case scenario for investors because the Federal Reserve has no good tool to fix both problems at the same time, the AP reports. "You can't sugarcoat this report," said Brian Jacobsen, chief economic strategist at Annex Wealth Management. "A negative payrolls number combined with a big jump in oil prices will have traders worrying about stagflation risks." Stagflation is what economists call the miserable mix of a stagnating economy with high inflation, and a separate report released Friday added to the sourness after showing that US retailers made less money in January than economists expected. That raised the disconcerting possibility that household spending, the main engine of the economy, may be stretched near its maximum.
To be sure, the US stock market has a history of bouncing back relatively quickly following conflicts in the Middle East and elsewhere, per the AP, as long as oil prices don't stay too high for too long. Uncertainty about just how high oil prices will go this time around and for how long caused frenetic swings across financial markets this past week, sometimes hour by hour. Among the big companies in the S&P 500, companies with high fuel bills helped lead the way lower on Friday. Old Dominion Freight Line sank 7.9%, cruise line Carnival fell 5%, and Southwest Airlines lost 5.3%.
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