Thursday was one of those days where the market couldn't decide if it wanted to panic or just have a mild headache. U.S. stocks opened with a thud, down more than 1%, following President Donald Trump's prime-time address the night before. But then, like a glimmer of hope in a tense geopolitical drama, reports surfaced that Iran and Oman were drafting a protocol to manage traffic through the critical Strait of Hormuz. Markets briefly caught their breath.
Before anyone got too excited, the details poured cold water on the idea of immediate de-escalation. According to CNBC, citing a translated document from Iran's state news agency IRNA, the arrangement attributed to Deputy Foreign Minister Kazem Gharibabadi is a peacetime framework for after any conflict, not a ceasefire signal. Trump later added fuel to the fire on social media, warning Iran that "much more" could follow after its "biggest bridge comes tumbling down, never to be used again."
In this environment, the price of crude oil did what it often does: it shot up. A lot. West Texas Intermediate (WTI) crude, as tracked by the United States Oil Fund (USO), surged 11.9% to $112 per barrel. That puts it on track for its highest daily closing price since June 2022. When the world's most important oil chokepoint is in the headlines, the commodity market tends to vote with its wallet.
Against this backdrop, the major stock indices were nursing losses by midday. The S&P 500 was down 0.3% to 6,557, the Dow Jones Industrial Average fell 0.5% to 46,345, and the Nasdaq 100 declined 0.3% to 23,938. The small-cap Russell 2000 index was the odd one out, eking out a 0.1% gain to 2,513. The fear gauge, the CBOE Volatility Index (VIX), jumped 5.7% to 25.94, a clear sign that traders were paying for insurance against more swings.
Within the market's elite group, the "Magnificent Seven," Tesla Inc. (TSLA) was having a particularly rough day. Its shares sank over 4% to a seven-month low after the company posted one of its weakest first-quarter delivery figures in recent years. It's a reminder that even high-flyers can get grounded by fundamentals. Amazon.com Inc. (AMZN) also dipped, down 0.5%, after Iran's Islamic Revolutionary Guard Corps announced a direct strike on a company data center in Bahrain.
In a twist, the economic data released Thursday told a different, more optimistic story. Initial jobless claims fell to a near two-year low of 202,000 for the week ending March 28, handily beating the estimate of 212,000. Meanwhile, the U.S. trade deficit for February came in at $57.3 billion, which was tighter than the $59.2 billion forecast. A strong labor market and improving trade balance are usually good news, but on a day dominated by oil and geopolitics, they played second fiddle.
Gold, often a safe haven, didn't get the memo. Spot prices retreated sharply, falling 2.4% to $4,672.93 per troy ounce. A stronger U.S. dollar and rising real yields made the non-yielding metal less attractive, proving that in chaotic markets, not all havens are created equal.
