US Stocks Hit Black Thursday: Three Major Indices Plunge Over 1.5% Collectively, Brent Oil Surges to $100, Inflation Clouds Return

The rapid escalation of the Middle East situation has once again become a “black swan” for global capital markets. On March 12, Iran’s new Supreme Leader, Muqtada Khamenei, issued his first statement since taking office, explicitly stating that the Strait of Hormuz should remain closed and warning all U.S. military bases in the Middle East to be shut down immediately, or they will be attacked. This statement completely shattered market expectations of a quick de-escalation of the conflict, triggering intense volatility in global asset prices.

Oil prices surge to $100, reigniting inflation concerns

The international crude oil market reacted most violently. Brent crude futures rose $8.48 on Thursday, closing at $100.46 per barrel, a 9.22% increase, crossing the $100 mark for the first time since August 2022. U.S. crude futures for April delivery on the New York Mercantile Exchange increased $8.48, closing at $95.73 per barrel, up 9.72%.

The International Energy Agency (IEA) warned that this war is causing the most severe oil supply disruptions in history. In its latest monthly report, the agency stated that Gulf countries in the Middle East have cut at least 10 million barrels per day of oil production, nearly 10% of global demand. Although IEA member countries agreed to release a record 400 million barrels from strategic reserves, Energy Aspects analysts noted that this stockpile is mainly crude oil and can only cover about 25 days of current transportation disruptions.

White House spokesperson Caroline Leavitt said that to address the surge in oil prices, the Trump administration is considering a temporary exemption from the century-old Jones Act, which regulates domestic shipping in the U.S. Exemption would help ease nationwide fuel transportation pressures. U.S. Energy Secretary Chris Wray admitted that the U.S. Navy currently cannot escort ships navigating the Strait of Hormuz, “This will happen soon, but now is not the time.”

U.S. stocks plummet across the board, tech giants not spared

Under the dual pressures of geopolitical risks and inflation concerns, U.S. stock markets declined sharply on Thursday. By the close, the Dow Jones Industrial Average fell 739.42 points, down 1.56%, to 46,677.85; the S&P 500 dropped 103.18 points, down 1.52%, to 6,672.62; the Nasdaq Composite declined 404.15 points, down 1.78%, to 22,311.98.

Of the 11 major sectors in the S&P 500, only the energy sector rose 1.0%, while others declined. The industrials sector fell 2.5%, leading the declines; consumer discretionary down 2.21%, information technology/tech down 1.72%, and financials down 1.62%.

Large tech stocks all suffered declines. Tesla fell 3.14%, Meta down 2.55%, Apple down 1.94%, Google-A down 1.67%, Nvidia down 1.54%, Amazon down 1.47%, Microsoft down 0.73%. Chip stocks experienced even sharper sell-offs, with the Philadelphia Semiconductor Index dropping 3.43%, Intel down over 5%, TSMC down 5%, Microchip Technology, Texas Instruments, and NXP Semiconductors down over 4%.

Carson Group Chief Market Strategist Ryan Detrick said, “The market is realizing that prospects for resolving the Middle East conflict are increasingly bleak. The current mindset is to sell first and ask questions later. Aside from the energy sector, there are hardly any safe havens.”

Financial sector under pressure, private credit risks emerge

The financial sector was another major casualty. JPMorgan Chase on Thursday downgraded valuations of some private credit funds, with stock falling 1.6%; Morgan Stanley restricted redemptions from a private credit fund, with shares down 4.1%. Swiss private equity firm Partners Group warned that as credit quality deteriorates, private credit default rates could double in the coming years.

Bank stocks declined across the board, with Goldman Sachs down over 4%, Citigroup down more than 3%, Bank of America nearly 3%, and Wells Fargo down over 2%. Airlines also performed poorly, with Boeing down over 4%, Southwest Airlines down more than 7%, and United Airlines down over 4%.

Notably, the surge in fertilizer prices triggered by the Middle East conflict has led to significant gains for fertilizer producers. Agriculture fertilizer companies reliant on Hormuz Strait shipping saw their stocks soar, with the S&P Fertilizers & Agricultural Chemicals Index up 4.9%, CF Industries’ stock jumping over 13%, reaching a record high. Chemical companies LyondellBasell and Dow rose 10.3% and 9.3%, respectively, after Citigroup upgraded their ratings, citing that disruptions in Middle Eastern supply chains could create new export opportunities for these firms.

Most Chinese concept stocks decline, Xpeng and NIO defy the trend and rise

The Nasdaq Golden Dragon China Index fell 1.02%. Stock performance was mixed: Xpeng rose 3.55%, NIO up 1.19%, Tencent Music up 2.47%, NetEase up 0.88%; Futu Holdings down 6.31%, KE Holdings down 3.49%, Li Auto down 2.52%, Baidu down 1.59%, Alibaba down 1.52%, Pinduoduo down 1.28%.

Federal Reserve rate cut expectations sharply reversed

The surge in oil prices is profoundly changing market expectations for monetary policy. The Federal Reserve will hold a monetary policy meeting on March 17. The market generally expects rates to remain unchanged, but investors will closely watch the latest economic forecasts for inflation estimates.

According to Lu Zhe, Chief Economist at Dongwu Securities, if oil prices stay between $80 and $100 per barrel, the U.S. CPI over the next six months should center around a 0.3% to 0.4% month-over-month increase, with the year-over-year CPI growth reaching 2.8% to 3.5% by September. If oil prices spiral out of control upward, U.S. inflation could repeat the stagflation of the 1970s with a double peak.

Fitch Ratings in its latest “Global Economic Outlook March 2026” raised its forecast for Brent crude oil average price in 2026 from $63 to $70 per barrel. However, if prices reach $100 per barrel and stay there, Fitch estimates that global GDP will decline by 0.4% after four quarters, and U.S. inflation will rise by 1.2 to 1.5 percentage points.

Detrick said, “Rising oil prices mean markets are reassessing the path of monetary policy. Behind the increase is the market realizing that the Fed’s chances of cutting rates later this year are rapidly diminishing.” Federal funds futures show that the market expects only a 19 basis point rate cut by the end of the year, meaning investors are no longer fully betting on a single 25 basis point cut this year. Goldman Sachs has delayed its rate cut expectations, now expecting the Fed to cut 25 basis points in September and December, after previously expecting a new easing cycle to start in June.

Corporate developments: Amazon bonds in high demand, Google Maps gets AI upgrade

Despite market turbulence, some companies continue to demonstrate strong financing capabilities. This week, Amazon issued $37 billion in bonds across 11 maturities in the U.S., with subscription orders reaching as high as $126 billion, nearing a record. On Wednesday, the company also issued bonds in the euro market for the first time, totaling €14.5 billion (about $16.8 billion), setting a record for the largest corporate bond issuance in the euro market history.

Tech giants continue to bet on AI. Microsoft and Meta have each added nearly $50 billion in data center leasing commitments in the past quarter to support AI development. Including Oracle and Amazon, the total commitments for data center leasing from the world’s largest cloud providers have exceeded $700 billion. Alphabet is rolling out its biggest upgrade to Google Maps in over a decade, introducing a new feature called “Ask Maps,” allowing users to interact with the app as if chatting with a chatbot.