NEW YORK — U.S. stocks entered correction territory on Thursday as rising oil prices amid the ongoing conflict with Iran pressured investor sentiment and heightened concerns over inflation and economic growth.
The S&P 500 closed at 6,477.16, down 1.74 percent, placing the benchmark index more than 10 percent below its recent record high. The Nasdaq composite fell 2.4 percent, while the Dow Jones Industrial Average dropped 469 points, or about 1 percent. The declines marked the sharpest single-day losses for the major indexes since late February, when initial U.S. and Israeli strikes on Iran triggered market volatility.
Oil prices surged as uncertainty persisted over the Strait of Hormuz. Brent crude futures rose more than 4 percent to settle above $106 a barrel, while U.S. West Texas Intermediate crude climbed to around $94 a barrel. Iran has maintained restrictions on shipping through the strait, a critical chokepoint that normally handles about one-fifth of global oil trade. Commercial traffic has dropped sharply since early March, with only limited approved transits reported.
The increase in energy costs has contributed to broader market pressure. Higher oil prices raise expenses for transportation, manufacturing and consumer goods, potentially feeding into inflation. Treasury yields rose, with the 10-year note climbing to 4.42 percent, reflecting investor concerns about borrowing costs and Federal Reserve policy.
Technology and growth stocks, which are sensitive to interest rates, led the declines. Major companies in the sector posted losses of 2 percent to more than 8 percent. The S&P 500 now stands about 7.2 percent below its peak earlier this year, entering the range generally defined as a correction of 10 percent or more from recent highs.
The downturn follows weeks of volatility tied to developments in the Middle East. President Donald Trump extended a deadline for Iran to reopen the strait to April 6, citing backchannel talks, but limited progress has kept energy markets elevated. Israeli strikes on targets in Tehran and other areas were reported Friday morning, adding to regional tensions.
As of Friday morning, trading in futures contracts pointed to continued volatility. Energy markets remained elevated, and officials continued to monitor shipping activity in the Strait of Hormuz and diplomatic efforts to resolve the conflict.
