Oil War and Consumer Sentiment Shock: U.S. Stock Market Declines for 5 Consecutive Weeks... What Lies Ahead

On March 27 in New York, the S&P 500 closed down 1.7% at 6,368.85, the Dow Jones Industrial Average fell 1.7% to 45,166.64, and the Nasdaq Composite dropped 2.1% to 20,948.36. This marked the fifth straight week of losses for all three major indices, their worst weekly performance since the outbreak of the Iran conflict. Both the Dow and the Nasdaq have slipped more than 10% from their recent highs, officially entering “correction” territory.

The primary driver of the sell-off was renewed escalation in the Middle East and a sharp jump in oil prices. Iran’s Islamic Revolutionary Guard Corps threatened to effectively blockade the Strait of Hormuz against U.S. and allied vessels, pushing Brent crude toward $110 a barrel—well above pre-war levels. Investors worry that a squeeze on energy supplies could reignite global inflation, slow economic growth and squeeze corporate profits.

Economic data added to the chill. The final March reading of the University of Michigan’s Consumer Sentiment Index showed a larger-than-expected drop, signaling that high gasoline prices and elevated interest rates are weighing heavily on household confidence. At the same time, the yield on the 10-year U.S. Treasury topped 4.4%, up sharply from pre-conflict levels, effectively erasing hopes of a Fed rate cut this year. Futures markets are even pricing in the possibility of further rate hikes, which would push mortgage and corporate borrowing costs higher and add another layer of pressure on equities.

By sector, rising macro risks overwhelmed company-specific news. Growth stocks were broadly sold: Amazon and Meta Platforms each tumbled about 4%, while Nvidia slid more than 2%. Consumer-discretionary names such as Norwegian Cruise Line, Starbucks and Chipotle saw declines of 4%–7%, reflecting concerns that higher energy costs will dampen spending. Although energy stocks held up relatively well, they were not enough to offset the broader slump.

This week’s market downturn was driven by three concurrent themes—an escalating Iran conflict, spiking oil and bond yields, and deteriorating consumer sentiment. In the weeks ahead, the course of the war, the trajectory of oil prices, and incoming labor and inflation data—and how they influence Fed policy—will be the key watchpoints for investors in both the U.S. and Korea.