Here's what happens when a tiny strip of water becomes the center of the financial universe: oil prices rocket, stocks tumble, and traders suddenly remember that geography is a thing. That was the story on Thursday, as a geopolitical standoff over the Strait of Hormuz sent crude soaring and triggered a broad market sell-off fueled by fresh stagflation worries.

West Texas Intermediate crude rallied 8.6% to $94.76 a barrel. Brent crude, the global benchmark, gained 7.9% to $99.25, having briefly kissed the psychologically significant $100 level overnight. The catalyst? In his first televised appearance, Iran's Supreme Leader Mojtaba Khamenei reiterated demands for the Strait of Hormuz to remain closed. For those keeping score at home, that narrow passageway handles about one-fifth of the entire world's oil supply. Closing it is like putting a kink in the global economy's main fuel line.

The risk-off mood deepened from there. Former President Donald Trump added to the tension, writing on social media that higher oil prices mean "a lot of money" for America. Meanwhile, in the background, traders were quietly but decisively changing their minds about the Federal Reserve. They fully priced out the final interest rate cut that had been expected for late 2026. When oil spikes, the Fed's job of managing inflation gets a lot harder, and the market knows it.

By midday in New York, the damage was clear. The S&P 500 fell 1.0% to 6,700. The Dow Jones Industrial Average dropped 1.2% to 46,860. The Nasdaq 100 declined 1.3% to 24,635. The Russell 2000, representing smaller companies, underperformed with a 1.7% loss to 2,500.

Only one sector was smiling: energy. The Energy Select Sector SPDR Fund (XLE) gained 2.1%. Everywhere else, it was red. Nine of the 11 S&P 500 sectors traded lower. The Industrial Select Sector SPDR Fund (XLI) and the Consumer Discretionary Select Sector SPDR Fund (XLY) each fell 1.6%, lagging the broader market.

Even seemingly good news wasn't enough to fight the tide. Dollar General Corporation (DG) reported fourth-quarter fiscal 2025 earnings that topped estimates, with diluted EPS of $1.93 on revenue of $10.9 billion—a 5.9% year-over-year gain. But the market is a forward-looking beast. The company's fiscal 2026 guidance disappointed, projecting same-store sales growth of 2.2%–2.7% and revenue of roughly $44.1 billion at the midpoint, which was below the Wall Street consensus of $44.43 billion. The result? Shares fell 4.5%, marking the stock's worst session so far in 2026.

Fertilizers And Chemicals Jump On Risks Of Prolonged Hormuz Disruption

If you wanted to find the day's biggest winners, you had to look beyond the obvious energy plays. The real action was in fertilizers and chemicals. Why? Because the Strait of Hormuz isn't just an oil chokepoint; it's also a critical route for global shipments of ammonia, urea, sulfur, and petrochemicals. Roughly 30% of global fertilizers and 48% of traded sulfur transit the region. With those flows now severely curtailed, U.S. producers suddenly have immense pricing power.

CF Industries Holdings, Inc. (CF), North America's largest nitrogen fertilizer producer, surged 13.4%. It's up more than 22% over the past two sessions—on pace for its largest two-day rally in history. The Mosaic Company (MOS) gained 8.9%; its phosphate and potash margins benefit directly when supply disruptions hit Gulf-sourced sulfur and ammonia, two critical production inputs.

The petrochemical stocks ripped right alongside the fertilizers. Dow Inc. (DOW) rose 8.4%. LyondellBasell Industries N.V. (LYB) climbed 7.3%. Celanese Corporation (CE) surged 13.1%. In a down market, these were the clear, thematic winners of a supply shock.

Thursday's Performance In Major US Indices, ETFs

Here’s a snapshot of how the major indices and their corresponding ETFs were faring by midday:

Data as of 12:20 p.m. ET

According to market data:

• The Vanguard S&P 500 ETF (VOO) fell 1.2%.
• The SPDR Dow Jones Industrial Average (DIA) fell 1.3%.
• The tech-heavy Invesco QQQ Trust Series (QQQ) declined 1.5%.
• The iShares Russell 2000 ETF (IWM) traded 2.0% lower.

Russell 1000's Top 5 Gainers And Losers On Thursday

The day's standout moves, for better or worse, were concentrated in these names:

Top Gainers

Top Losers

So, to recap: a geopolitical flashpoint sent oil prices screaming higher. That triggered stagflation fears and a stock sell-off, while completely rewriting the playbook for certain industrial sectors. It was a stark reminder that in today's interconnected world, a crisis in a narrow waterway can ripple through every corner of the market, from the Fed's rate path to the price of fertilizer.