U.S. equities closed the week under pressure, marking one of the sharpest weekly pullbacks since late 2025. All three major indices declined amid heightened volatility, with the Dow Jones Industrial Average losing close to 1,500 points over the week, while the S&P 500 and Nasdaq Composite also registered notable declines. By Friday’s close, the S&P 500 had fallen to 6,740.02, down 1.33% for the day, while the Nasdaq dropped 1.59% to 22,387.68.
The downturn was largely driven by two developments that unsettled investors simultaneously: unexpectedly weak U.S. employment data and a rapid rise in global oil prices linked to escalating geopolitical tensions. Together, these factors revived concerns about the resilience of economic growth and introduced a new source of uncertainty into financial markets.
Weak Labour Market Data Surprises Investors
Investor sentiment deteriorated following the release of the February U.S. employment report, which came in significantly weaker than market expectations. Instead of showing continued job creation, the report revealed that non-farm payrolls declined by approximately 92,000 positions during the month. At the same time, the unemployment rate edged up to 4.4%, indicating a modest softening in labour market conditions.
The data challenged the prevailing narrative that the U.S. labour market remained broadly resilient. Market participants had expected moderate job growth, and the unexpected contraction raised concerns that economic momentum may be slowing more quickly than anticipated.
Oil Prices Surge Amid Middle East Tensions
At the same time, developments in the Middle East added another layer of uncertainty to global markets. Oil prices surged above US$90 per barrel, reaching their highest levels since 2023, as the conflict between the United States and Iran intensified.
A key concern for markets has been the potential disruption to shipping through the Strait of Hormuz, a critical passage for global oil transport. Reports of tanker traffic slowing significantly through the region have heightened fears of supply disruptions, driving crude prices sharply higher. The sudden spike in energy costs has quickly become one of the dominant macro themes influencing market sentiment.
Broad Market Sell-Off with Energy as a Bright Spot
The combination of weaker economic data and rising energy prices triggered a broad-based decline across equity sectors. Nine of the eleven sectors within the S&P 500 finished the week lower, with consumer discretionary and materials among the worst performers.
Energy stocks, however, stood out as one of the few areas of resilience, supported by the sharp increase in crude prices. Meanwhile, financial stocks also faced pressure during the week. Shares of BlackRock experienced their steepest single-day decline since April 2024 after the firm announced limits on withdrawals from one of its private credit funds, a development that raised concerns about potential strains within segments of the credit market.
Market Outlook
Looking ahead, investor attention is likely to remain focused on geopolitical developments and any further signs of stress within financial markets. The sharp rise in oil prices introduces an additional variable that could influence both economic activity and corporate margins in the coming months.
The events of the past week highlight how quickly market sentiment can shift when economic data surprises to the downside while geopolitical risks intensify. What began the year as a relatively optimistic outlook for markets has, at least for now, given way to a more cautious tone among investors.
