U.S. stocks closed sharply lower on March 20, registering losses for the fourth straight week and nearly pushing the tech-heavy Nasdaq and blue-chip Dow into a correction, or at least 10% below its recent high.
Stocks are reeling as the Strait of Hormuz remains essentially shut amid the war with Iran. A fifth of the world’s oil, mostly to Asia and Europe, ships through the narrow waterway, and its blockage has pushed international Brent crude prices sharply higher. Brent crude was last up 2.84% at $111.74 per barrel.
Since oil is used in nearly every part of our lives — from manufacturing and travel to trucking produce to grocery stores and consumers’ online orders to homes and offices — economists worry about how the spike in oil prices will affect inflation and economic growth. The cost of oil is the primary driver of retail gasoline prices, typically accounting for more than half the total price per gallon, according to the Energy Information Administration.
The longer fighting in the Middle East lasts, the worse it will be for the economy, economists predicted. Currently, there doesn’t look like an easy off-ramp, they said.
The Pentagon is sending thousands of additional Marines to the Middle East, and Reuters reported that Iraq has declared force majeure on all oilfields operated by foreign companies.
Economists Sound the Alarm on Consumer Spending
“We had anticipated a lift in spending from a bumper tax refund season, but the rise in gasoline prices, if sustained, would more than offset that boost,” said Chief US Economist Michael Pearce and Lead Economist Bernard Yaros at Oxford Economics in a report. They now forecast consumption growth to slow to just 1.9% this year from 2.5% in February, the slowest pace since 2013, excluding the pandemic.
How the Markets Closed
The broad S&P 500 closed down 1.51%, or 99.9 points, to 6,506.59; the Dow lost 0.97%, or 446.51 points, to 45,574.92; and the Nasdaq shed 2.01%, or 443.08 points, to 21,647.61.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday
This article originally appeared on USA TODAY: US stocks slide, Nasdaq, Dow near corrections amid Iran war
Reporting by Medora Lee, USA TODAY / USA TODAY
USA TODAY Network via Reuters Connect
