Stocks sank on Friday as the war against Iran drove oil prices sharply higher, while an unexpected loss of US jobs in February increased hopes for Federal Reserve rate cuts but did little to cheer investors worried about economic weakness.
Trading was choppy in currencies and US Treasuries as investors digested the Bureau of Labour Statistics report showing that non-farm payrolls fell by 92,000 jobs last month, against economists' forecasts for growth of 59,000.
February's losses contrasted with a 126,000 downwardly revised increase in January. The unemployment rate rose to 4.4 per cent, from January's 4.3 per cent.
The Dow Jones Industrial Average fell 0.95 per cent to 47,501.55 points, posting its steepest weekly percentage drop since early April 2025. The S&P 500 lost 1.33per cent to 6,740.00 points and had its worst week since mid-October. The Russell 2000 recorded its sharpest weekly fall since early August.
The Nasdaq Composite slipped 1.59 per cent to 22,387.68.
Traders are currently pricing in little chance of an interest-rate cut at the Fed’s March meeting, although bets on an April cut rose on Friday morning.
It comes as Israel pounded the Lebanese capital Beirut on Friday after issuing an unprecedented order for people to leave the entire southern suburbs of the city, in a major expansion of the Middle East war.
US President Donald Trump, meanwhile, has demanded Iran's “unconditional surrender”.
Qatar’s energy minister warned in a Financial Times article Friday that the conflict, almost in its second week, will probably force Gulf countries to halt energy exports, which would cause significant economic damage and potentially push oil prices to $150 a barrel.
Crude oil was set for its strongest weekly gain since the extreme volatility of the Covid-19 pandemic in spring 2020, as the war halted shipping and energy exports via the crucial Strait of Hormuz.
US crude oil futures climbed more than 12 per cent on Friday, to more than $90 per barrel, while international Brent rose about 8.5 per cent to $92 per barrel.
In currencies, the dollar pared earlier gains against major currencies after the weak jobs report raised the possibility that the Fed could cut interest rates sooner than expected.
Gold edged up on Friday after softer US payrolls data kept hopes for rate cuts alive, though a stronger dollar capped gains and left the precious metal on track for its first weekly decline in five weeks.
Friday’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.
Anthropic, which has roiled several 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.
