US Stocks Drop as Oil Surge, Job Losses Send Traders to Exits

US stocks slumped to end a volatile week, with soaring oil prices and the specter of energy supply shocks from the war in the Middle East fanning inflation fears, and a surprise decline in US jobs stoking concerns about growth.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — US stocks slumped to end a volatile week, with soaring oil prices and the specter of energy supply shocks from the war in the Middle East fanning inflation fears, and a surprise decline in US jobs stoking concerns about growth.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.Qatar’s energy minister warned in a Financial Times article Friday that the conflict, which is nearing the one-week mark, will likely force Persian Gulf countries to halt energy exports, which would cause significant economic damage and potentially push oil prices to $150 a barrel. US crude oil futures climbed to $88 a barrel and stocks, which have seen their correlation to oil rise sharply, dropped.The Cboe VIX Index, also known as Wall Street’s chief fear gauge, reached 28 after US President Donald Trump ruled out a deal to end the war, saying he wants Iran’s “unconditional surrender.” The comments followed a disappointing jobs report, in which the economy unexpectedly shed 92,000 positions and the unemployment rate ticked higher. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.The S&P 500 Index pared losses to 1% at 12:01 p.m. in New York, as it tested a resistance level on the way down and nearly four stocks in the benchmark dropped for every one that gained. The tech-heavy Nasdaq 100 Index fell 0.7%, while the Dow Jones Industrial Average tumbled 1.1%.“The payrolls report was terrible, and it could even ignite a new round of bad-news-is-good-news conversations,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. He said that if the market is taking the report well, “it would only be because it would make the Fed more likely to cut rates, given the bad news from the jobs market.”Indexes came off their session lows midmorning but remained solidly in the red. “Retail investors continue to use weakness as a buying opportunity, while institutions are taking action to de-risk, leaving themselves vulnerable to a positive catalyst,” said Mark Hackett, chief market strategist at Nationwide. He said investors are contending with “strikingly pessimistic” headline risk, including from the war, the potential for AI disruption and growing unease about private credit.Traders are currently pricing in little chance of an interest-rate cut at the Fed’s March meeting, though bets on an April cut rose Friday morning. “A softer labor market argues for eventual rate cuts, but policymakers will need clearer evidence that inflation is easing before making that move,” said Gina Bolvin, president of Bolvin Wealth Management.Chicago Fed President Austan Goolsbee said Friday that he’s hopeful the central bank can resume interest rate cuts by the end of 2026. Meanwhile, San Francisco Fed President Mary Daly said the February employment report undermines the notion that the US labor market was stabilizing.“I think the FOMC is going to sound utterly paralyzed on March 18th,” said Derek Holt, vice-president and head of capital markets economics at Scotiabank. “Both parts of the dual mandate are deteriorating and they won’t have a clue how to balance them by way of what to do in the short-term.”Meanwhile, the war continues to widen as strikes intensify. Israel and Iran traded missile fire overnight, with the Iranian firing a barrage of missiles and drones targeting multiple Gulf states overnight. Multiple blasts were reported in Bahrain.“Oil prices have surged toward $90 as Middle East tensions intensify, representing a rapid and structural repricing of energy markets rather than a typical geopolitical tremor,” said Mark Malek, chief investment officer at Muriel Siebert & Co. “The speed of the move reflects how unprepared markets were for a conflict that escalated gradually rather than through a sudden shock.”Headwinds BuildFriday’s move caps off a choppy week in the stock market, which had been flat for the year before the bombing campaign began a week ago, though jitters had been mounting around the disruptive power of artificial intelligence and the potential for cracks in private credit. These concerns, while sidelined by the war, continue to linger in the minds of investors.“Investors need to be careful about assuming that the action in the stock market going forward is going be determined exclusively by the conflict in the Middle East,” said Matt Maley, chief market strategist at Miller Tabak + Co. He added the recently overlooked issues of AI and the credit market “continue to create headwinds as well.”Anthropic PBC, which has roiled multiple sectors with its Claude AI tool, vowed this week to legally contest a Pentagon decision declaring the company a threat to the US supply chain.Blue Owl Capital Inc. has roughly $48 million in exposure to Century Capital Partners Ltd., a London-based property lender that filed for administration last month, exacerbating private credit worries.Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. 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