Oil Prices Spike, Stocks Fall After Trump Address

Stock futures experienced significant drops and oil prices surged on Thursday morning following President Donald Trump’s address regarding the conflict with Iran. The speech failed to reassure markets that the fighting would conclude quickly.

Market Reaction: Futures Tumble

S&P 500 futures fell 1.7%, while Nasdaq 100 futures tumbled 2%. Dow futures slid 600 points, and Russell 2000 futures dropped by more than 2%. This indicates widespread investor concern following the President’s statements.

Trump's Pledge of Continued Strikes

In his address on Wednesday, President Trump stated the war would end ‘shortly,’ but also pledged to conduct additional ‘extremely hard’ strikes on Iran ‘over the next two to three weeks.’ He did not outline a clear path toward a ceasefire or a plan to reopen the crucial Strait of Hormuz.

Strait of Hormuz Concerns

The Strait of Hormuz, a vital waterway for global oil supply – handling over 20% of the world’s total – remains a key concern. President Trump stated, ‘The Strait will open up naturally,’ without detailing a specific strategy.

Oil Prices Reach New Highs

Oil prices began to rise during President Trump’s speech and continued to climb thereafter, reversing two days of previous declines. U.S. crude oil surged 10% to $110 per barrel, and Brent crude, the international benchmark, jumped 8% to over $109 per barrel. Prices for heating oil and natural gas also increased.

Gas Prices Rise Significantly

The national average price for a gallon of unleaded gasoline reached $4.08 on Thursday, a substantial increase from $2.98 before the conflict began. This reflects the impact of rising oil prices on consumers.

Analyst Commentary

“The markets wanted something different,” wrote Paul Donovan, CIO at UBS Global Wealth Management, in a note on Thursday. He warned that U.S. escalation risks provoking an Iranian response, potentially causing further damage to infrastructure in the Gulf.

International Efforts to Reopen Strait of Hormuz

U.K. Foreign Secretary Yvette Cooper hosted a video call with representatives from 35 nations, including several Gulf states, to discuss reopening the Strait of Hormuz. The United States did not participate in this meeting, according to Reuters. Cooper indicated that de-escalation of the conflict is necessary before deploying ‘our collective defensive military capabilities,’ as reported by NBC News partner Sky News.

Bond Yields and Mortgage Rates Increase

U.S. government bonds fell on Thursday, causing yields to rise. The 10-year Treasury yield rose to around 4.37%, influencing consumer mortgage rates. Currently, a 30-year fixed rate mortgage averages 6.45%, up from 5.99% before the war began, according to Mortgage News Daily.