The S&P 500 shed 1.24% to close at 7,408.50, while the Nasdaq Composite slipped 1.54% to finish at 26,225.14. The Dow Jones Industrial Average lost 537.29 points, or 1.07%, to settle at 49,526.17. For the week, however, both the S&P 500 and Nasdaq managed modest gains of approximately 0.3%, suggesting the declines were concentrated in Friday’s session.
Oil prices climbed sharply on escalaring U.S.-Iran tensions. U.S. West Texas Intermediate futures rose 4.2% to settle at $105.42 per barrel, while international Brent crude settled at $109.26 per barrel, up 3.35% on the day. The moves followed President Trump’s remark that he is “not going to be much more patient” with Iran and that Tehran should strike a deal to reopen the Strait of Hormuz, a critical global oil shipping corridor that has faced disruptions. The ongoing blockade has removed a significant volume of oil from global markets, contributing to the price surge.
Treasury yields jumped sharply, pressuring equities. The benchmark 10-year U.S. Treasury yield climbed to approximately 4.60%, approaching one-year highs, while the 30-year rate topped 5.1% for the first time since 2007, according to market reports. A series of economic reports released this week showed inflation re-accelerating as oil prices remain elevated due to the Middle East conflict, raising concerns that the Federal Reserve may need to maintain or tighten its restrictive policy stance.
For the first time in the current cycle, futures markets are now pricing the Federal Reserve’s next interest rate move as a hike rather than a cut. According to CME Group’s FedWatch tool, fed funds futures now assign approximately a 51% probability to a rate increase by December 2026, with certainty rising into early 2027 — a March 2027 hike carries a probability exceeding 71%. The shift reflects mounting concerns that persistent oil-driven inflation may limit the Fed’s flexibility to ease monetary policy.
Technology stocks led the retreat. Intel fell more than 6%, while Advanced Micro Devices and Micron Technology lost 5.7% and 6.6% respectively. Nvidia dropped 4.4%, and Cerebras Systems — which had surged 68% on Thursday following its Nasdaq listing — gave back 10% on Friday. Microsoft was a notable exception, climbing 3% after Bill Ackman’s Pershing Square disclosed a position in the name. Boeing extended losses, falling 3.8% after declining nearly 5% in the previous session, as investors deemed the announcement of 200 Boeing jet orders from China underwhelming — merely 50 more than previously anticipated.
The U.S.-China summit concluded with an agreement to keep the Strait of Hormuz open, according to a U.S. readout shared by a White House official. However, traders reacted with disappointment to the absence of concrete deals or major policy breakthroughs, contributing to the broad retreat across equities.
In currency markets, the dollar climbed to a five-week high against a basket of major trading partners, pressured by the spike in Treasury yields. Emerging market currencies, including the Mexican peso, Brazilian real, Thai baht and South Korean won, faced renewed selling pressure as the dollar strengthened and rate hike expectations shifted.
Gold prices fell more than 2% to trade near $4,559 per ounce, pressured by higher real yields and a stronger dollar — traditional headwinds for the non-yielding metal. Bitcoin retreated roughly 3% to around $79,080 as risk assets broadly softened.
Market analysts noted that despite the record-breaking run fueled by artificial intelligence enthusiasm, the broader rally has become increasingly concentrated in a handful of large technology names. On Friday, just 11 stocks in the S&P 500 traded at new all-time highs, underscoring the narrow leadership base that has characterized the market’s advance. Analysts at Argent Capital Management described the dynamic as “inherently more risky than if there were several things” driving gains simultaneously.
Looking ahead, investors will monitor developments in the Iran situation, any further signals from Fed officials regarding the rate path, and incoming economic data for confirmation of the inflation trend.