(March 27): US stocks fell on Friday, taking the Nasdaq 100 Index into correction territory as the escalating war in Iran boosted oil prices and treasury yields climbed.
The S&P 500 Index was recently down 0.7%, on course for its fifth weekly decline, the longest streak since 2022. The tech-heavy Nasdaq 100 slid 1.1%, taking the fall from its October peak to more than 10% — commonly defined as a correction. Brent crude oil prices climbed to around US$111 per barrel while the Cboe Volatility Index advanced to about 30.
Iran and Israel exchanged missile fire and Tehran targeted several Gulf states, underscoring the willingness of the two sides to keep fighting even as US President Donald Trump pushes for peace talks. The attacks came hours after Trump moved back his deadline for Iran to agree to reopen the Strait of Hormuz or face attacks on its power infrastructure. Meanwhile, The Wall Street Journal reported that the US is weighing sending additional ground troops to the Middle East.
“It’s really oil,” said Ohsung Kwon, chief equity strategist at Wells Fargo & Co. “Brent rallying again is putting pressure on stocks.”
US economic data added to the unease, showing that the University of Michigan’s reading on consumer sentiment fell to a three-month low in March while year-ahead inflation expectations jumped.
See also: Carnival cuts profit outlook as Iran war pushes up fuel cost
Yields climb
Meanwhile, surging oil prices are stoking inflation worries and undercutting the case for the Federal Reserve to lower interest rates anytime soon, pushing up treasury yields as a result. Benchmark 10-year yields touched 4.48% on Friday, their highest level since mid-2025.
Elevated treasury yields are often seen as a hindrance to stocks, as they dim the allure of equities compared to government bonds while raising the cost of capital for companies.
See also: NYSE owner invests US$600 mil in Polymarket, capping deal
“I have to say that I cannot ignore the scary-high yield increase in the 10-year over the past few days,” said Mark Malek, chief investment officer at Siebert Financial. “The upswing in the past few sessions really solidifies to me that this market regime is here to stay for now. That means more volatility and downward pressure on equity markets.”
Late on Thursday, Fed officials expressed growing anxiety over the US economic outlook due to the war in the Middle East. Fed governor Lisa Cook said the spike in oil prices has shifted the balance of risks, leaving inflation as a bigger concern than employment.
“The move in yields is stemming from the fact that a 10-day delay is another 10 days of the Strait being closed, which prolongs the crisis and raises fears of an inflationary replay of 2022,” said John Briggs, head of US rates strategy at Natixis Corporate & Investment Banking.
Of course, the selloff has made tech stocks less richly valued, potentially enhancing their appeal to investors looking to buy on weakness. The Nasdaq 100 is priced at around 21 times estimated earnings, down from a peak of 28 times in October and a slight discount to its average over the past decade.
Still, “the risk is that constant flip-flopping and headline fatigue is starting to seriously undermine the efficacy of the ‘Trump put’,” Barclays strategists including Emmanuel Cau wrote in a note. “Meanwhile, the war goes on, and the longer the oil shock, the more severe the stagflationary shock.”
ploaded by Felyx Teoh
