TLDR
- Dow, S&P 500, and Nasdaq all fell Thursday as Middle East tensions sent oil prices surging
- Brent crude jumped to as high as $119/barrel after Israel and Iran struck each other’s energy infrastructure
- Bitcoin dropped below $70,000, adding to pressure from the Federal Reserve’s rate outlook
- The Fed signaled possible no cuts in 2026, with some traders now pricing in a rate hike
- Micron and Alibaba shares fell after earnings reports raised questions about returns on AI spending
US stocks fell Thursday after Israel and Iran exchanged strikes on oil and gas facilities in the Persian Gulf, sending crude prices sharply higher and rattling markets already dealing with rising inflation fears.
The Dow Jones Industrial Average dropped around 300 points at the open, or roughly 0.7%. The S&P 500 fell 0.9% and the Nasdaq Composite dropped 1.3% before both indexes pared some losses through the session.
Brent crude futures surged as much as 10%, hitting $119 per barrel before settling around $112. West Texas Intermediate crude rose more modestly to around $96 per barrel, widening the spread between the two benchmarks to its largest gap in years.
This is absolutely insane:
The world is quite literally facing what appears to be the largest energy crisis in history.
US crude oil futures are now trading at a $20+/barrel DISCOUNT to Brent, also one of the largest on record.
As the US increases production and taps into…
— The Kobeissi Letter (@KobeissiLetter) March 19, 2026
Israel struck Iran’s South Pars gas field. Iran responded with attacks on energy infrastructure in Qatar and Saudi Arabia. The exchange marked what analysts described as a new phase in the conflict.
David Rosenberg of Rosenberg Research warned that the destruction of energy infrastructure means oil prices are unlikely to return to pre-war levels quickly, even after the conflict ends.
The Fed and Rate Expectations
The Federal Reserve held rates steady at its latest meeting and signaled only one possible cut this year. Chair Jerome Powell’s comments were seen as hawkish, and traders are now pricing in no cuts in 2026. A near-term rate hike is also being discussed.
SUMMARY OF FED DECISION (3/18/2026):
1. Fed halts rate cuts for the second straight meeting
2. Fed projects one rate cut in 2026, one in 2027
3. Fed 2026 PCE inflation forecast revised higher to 2.7%
4. Fed says implications of Middle East developments are "uncertain"
5. Fed…
— The Kobeissi Letter (@KobeissiLetter) March 18, 2026
The Fed also revised its inflation forecasts higher, adding to concerns that the oil price surge could make the situation worse.
Weekly jobless claims came in at 205,000, down from the prior week, offering one positive data point in an otherwise troubled session.
Bitcoin fell below $70,000 on Thursday. The drop came alongside the broader market selloff and the Fed’s rate outlook. XRP also declined.
Corporate Moves
Micron shares dropped in premarket trading despite strong earnings. Investors focused on the company’s heavy AI spending plans, questioning when those investments would pay off.
Alibaba stock also fell after reporting a 67% drop in quarterly profit. The weak result highlighted pressure on the company to show returns from its AI push.
Asian markets slid overnight on news of the Middle East escalation. US short-dated Treasury yields also rose as a selloff in bonds accelerated.
The Philadelphia Fed Manufacturing Index was due later Thursday, with markets watching for any further signs of economic stress.
As of mid-morning in New York, the Dow was down 283 points, the S&P 500 was off 0.5%, and the Nasdaq was down 0.6%.
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