Dow drops 400 after trimming an early plunge of 1,200 as oil prices
climb even higher
[March 04, 2026] By
STAN CHOE
NEW YORK (AP) — A sell-off for stocks wrapped around the world and hit
Wall Street Tuesday, while oil prices climbed even higher on worries
about the widening war with Iran. But the big moves that rocked markets
in the morning eased substantially as the day progressed.
By the end of trading, the S&P 500 had sunk 0.9%. That would be a solid
loss on a typical day, but the index had been down as much as 2.5% in
the morning because of worries that the war may do more sustained damage
to the economy than feared.
The Dow Jones Industrial Average dropped 403 points, or 0.8%, after
plunging more than 1,200 points earlier in the morning. The Nasdaq
composite pared its loss to 1%.
It was just a day earlier that U.S. stocks opened the morning with a
sharp loss, only to recover all of it and end the day with a tiny gain.
Helping to drive that rebound was a record showing that past wars and
conflicts in the Middle East have not usually meant long-term pain for
U.S. stocks.
But that was with the caveat that oil prices did not jump too high, like
above $100 per barrel. On Tuesday, oil prices rose again and raised more
alarms. The price for a barrel of Brent crude, the international
standard, briefly leaped above $84.
The jump lessened through the day, though, which helped moderate the
losses for stocks. Brent settled at $81.40, up 4.7%. A barrel of
benchmark U.S. crude rose 4.7% to $74.56.
The moves showed oil prices, and how much they’re set to worsen
inflation, are among the central fears for investors. More expensive
fuel will mean less money for U.S. and other households to spend. It
would also raise expenses for companies worldwide, which would likewise
hurt their profits. And corporate profits are the lifeblood of stock
markets.
Tuesday’s climb for oil prices came after Iran struck the U.S. Embassy
in Saudi Arabia, part of a widening of targets that also includes areas
critical to the world’s oil and natural gas production. Worries are
particularly high about the Strait of Hormuz off the coast of Iran, a
narrow passageway where roughly a fifth of the world’s oil passes.
Iranian Brig. Gen. Ebrahim Jabbari, an adviser to the paramilitary
Revolutionary Guard, vowed that any ships that passed through the strait
would be set on fire.
The fears about oil prices ebbed a bit later in the day as President
Donald Trump said the U.S. Navy could begin escorting tankers through
the strait, “if necessary,” to “ensure the FREE FLOW of ENERGY to the
WORLD.”
Making things uncertain for markets is the question about how long this
war may continue.
A major attack by the United States and Israel has already killed
Iranian Supreme Leader Ayatollah Ali Khamenei, but Trump said late
Monday night on his social media network, “Wars can be fought ‘forever,’
and very successfully” with the supply of munitions that the United
States possesses.
Some professional investors said again Tuesday they don’t think this is
the beginning of a long-term down market and that stocks could rebound
if the war doesn’t last that long. But they acknowledge it could take a
while for that to become clear, and Tuesday’s swings for markets show
how uncertain things are.
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Meric Greenbaum works on the floor at the New York Stock Exchange in
New York, Tuesday, March 3, 2026. (AP Photo/Seth Wenig)
 Tuesday’s sell-off started in Asia,
where the Kospi stock index in South Korea, a big energy importer,
plunged 7.2% as markets reopened after a holiday on Monday. That was
its worst day since two summers ago, and it had been setting records
recently.
Tokyo’s Nikkei 225 dropped 3.1%, even as analysts said Japan has a
sizable stockpile lasting more than 200 days. In Europe, where
prices for natural gas have soared because of the war, France’s CAC
40 lost 3.5%.
On Wall Street, nearly three out of every four stocks within the S&P
500 dropped. Unlike a day before, influential Big Tech stocks
weren’t able to prop up indexes, and Nvidia fell 1.3%.
Among the winners on Wall Street was Target, which rose 6.7% after
the retailer reported a better profit for the latest quarter than
analysts expected.
All told, the S&P 500 fell 64.99 points to 6,816.63. The Dow Jones
Industrial Average dropped 403.51 to 48,501.27, and the Nasdaq
composite sank 232.17 to 22,516.69.
In the bond market, Treasury yields leaped in the morning with
worries about inflation. The yield on the 10-year Treasury briefly
rose above 4.10% before pulling back just below 4.06%. It was at
4.05% late Monday and just 3.97% on Friday.
Higher yields can make it more expensive for U.S. households and
businesses to borrow money, affecting everything from mortgages to
bond issuances. They also put downward pressure on prices for stocks
and all kinds of other investments.
When Treasurys are paying more in interest, they can also undercut
the price of gold, which pays its investors nothing. Gold fell 3.5%
Tuesday to settle at $5,123.70 per ounce, halting a strong run that
had taken it above $5,300 as investors looked for safer places to
park their money.
High inflation could also tie the Federal Reserve’s hands and keep
it from cutting interest rates. The Fed lowered rates several times
last year and indicated more cuts were to come in 2026. That would
help boost the economy and job market, but lower rates can also
worsen inflation.
Traders are now pushing back their forecasts further into the summer
for when the Fed could resume cutting rates, according to data from
CME Group. That’s even though Trump has been calling for Fed
officials in angry and personal terms to cut rates now.
___
AP Business Writers Yuri Kageyama and Michelle Chapman contributed.
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