MARKET SNAPSHOT

U.S. stocks dropped as oil prices rose with little meaningful progress in the efforts to end the war in Iran. Global government bond yields resumed their climb, with investors continuing to fret that interest rates will stay high. The U.S. dollar strengthened and gold declined.

MARKET WRAPS

EQUITIES

U.S. stocks fell sharply Thursday as efforts to end the war in Iran showed few signs of meaningful progress.

The Nasdaq composite fell 2.4%, closing in a correction, at least 10% below its recent high. The Dow Jones Industrial Average dropped 1.0%, and the S&P 500 lost 1.7%.

After the market closed, President Trump extended a deadline for Iran to reopen the Strait of Hormuz from Friday to April 6, saying that talks "are going very well."

The OECD sounded a note of caution on the outlook of the global economy, warning of a large setback to growth and a jump in inflation if an energy crisis worsens and drags on as a result of the conflict.

Jobless claims data signaled that while the U.S. labor market has been cooler, employers are holding off on widespread layoffs.

Earlier Thursday, equity markets in Asia ended mostly lower.

China's benchmark Shanghai Composite Index fell 1.1%, the Shenzhen Composite Index dropped 1.5%, and the ChiNext Price Index declined 1.3%.

Hong Kong's Hang Seng Index closed 1.9% lower.

Japan's Nikkei Stock Average declined 0.3%.

South Korea's Kospi dropped 3.2%.

Australia's S&P/ASX 200 Index edged 0.1% lower.

New Zealand's S&P/NZX 50 Index rose 0.4%.

COMMODITIES

Crude futures rose as the market remained doubtful about U.S. efforts to negotiate an end to the conflict with Iran.

Saber-rattling by the Iran-backed Houthis in Yemen, who attacked shipping in the Red Sea during the Israel-Hamas war, isn't helping, said Mizuho's Robert Yawger.

"The Saudis are moving 4 million barrels a day out of the Red Sea right now. If you take that out you're back to where we started having 16-18 million barrels shut in."

Meanwhile the market is "chasing headlines," he added. "If negotiations look more likely, the market's going to go south, if it makes it look like it's going to drag on for much longer, then the market goes higher."

WTI settled up 4.6% at $94.48 a barrel. Brent rose 4.7% to $108.01 a barrel.

Gold futures resumed their downward momentum after briefly pausing to climb over $4,500 a troy ounce Wednesday.

Front-month gold dropped 3.8% to $4,375.50/oz--the second-lowest close of the year.

Gold futures have finished lower in 10 of the past 12 sessions. The selloff is in reaction to crude oil prices rising back above $100 a barrel, said ADM Investor Services.

"Concerns that higher energy prices will push inflation higher, forcing central banks to adopt a more hawkish stance, continues to support the dollar and yields," said the firm.

Silver closed down 6.5% to $67.671/oz.

TODAY'S TOP HEADLINES

EU Lawmakers Vote to Advance U.S. Trade Deal

European Union lawmakers voted to advance talks on the bloc's trade deal with the U.S., bringing officials one step closer to implementing the accord.

Members of the European Parliament on Thursday voted 417 in favor and 154 against to adopt their position on pieces of legislation that would slash tariffs on U.S. goods under the trade deal, which was initially reached in July 2025 after months of back-and-forth between the European Commission and U.S. President Trump's administration. Under that deal, tariffs on most U.S. goods imported to the EU would be eliminated, while EU goods shipped to the U.S. would face a 15% tariff ceiling.

The vote paves the way for negotiations between lawmakers, EU countries and the European Commission. Bernd Lange, chair of the parliament's trade committee, said on Thursday the first of those talks would kick off on April 13.

Middle East Conflict to Push U.S. Inflation Sharply Higher, Says OECD

The global economy would suffer a large setback to growth if energy prices rise further and stay high for a lengthy period in response to the conflict in the Middle East, while inflation in the U.S. is set to jump, the Organization for Economic Cooperation and Development said Thursday.

In a quarterly report on the global economy, the Paris-based research body lifted its inflation forecast for the U.S. in 2026 to 4.2% from 3%, more than double the rate of price-growth targeted by the Federal Reserve.

The global economy proved more resilient than expected in the face of President Trump's tariff hikes last year, and the research body had been on course to raise its growth forecast for this year to 3.2% from 2.9% to reflect a continuing boost from higher AI-related investment spending and lower interest rates.

U.S. Manufacturing Rebound Continues, but the Biggest Challenges Lie Ahead

The effects of the war in Iran are not yet disrupting the recent rebound in U.S. manufacturing, but the sector isn't in the clear and remains vulnerable to the broader impacts of the conflict in the Middle East.

Manufacturing activity continued to tick up in March, according to several business surveys released this week. S&P Global's manufacturing purchasing managers' index was stronger than expected, while the Federal Reserve Bank of Kansas City's manufacturing survey and the Chicago Fed's Manufacturing Activity Index both logged moderate increases in activity over the past month-even amid the uncertainty posed by the latest Middle East conflict.

"Manufacturing certainly appears to be on an upswing over recent months and the U.S. regional surveys suggested it continued in March, despite the worries about higher energy costs and the potential for some supply disruption down the line," says James Knightley, ING's chief international economist in New York.

Energy-Price Shock Hits a World Already Buried in Debt

The costs of shielding the global economy from the most severe energy shock in decades are adding up-just when governments can least afford it.

Authorities around the world are trying to cushion the blow to ordinary people from soaring prices. The state of Georgia suspended its 33 cents-a-gallon gas tax, with other U.S. states considering doing the same. The U.K. government has promised to help pay some consumers' heating-fuel bills. China, Hungary and Japan have limited prices at the gas pump.

The efforts contain inflation but strain already-groaning government budgets. The longer the crisis in the Persian Gulf lasts, the more that governments will feel compelled to do.

Elon Musk's X Restructures Ahead of SpaceX IPO

Elon Musk's X has let go of its chief marketing officer and conducted a round of layoffs of nontechnical staff over the last several weeks as it looks to right-size the social-media company ahead of its parent company SpaceX's potential $1 trillion-plus IPO, people familiar with the matter said.

Angela Zepeda, X's marketing chief since September 2024, was let go last month after Musk announced xAI and SpaceX's merger, people familiar with the matter said. Over the past few weeks, X let go of more than 20 staffers in nontechnical roles including marketing and other departments that were seen as duplicative to jobs inside the merged company, the people said.

X merged with xAI last year and xAI and SpaceX combined in early February.