US stock markets plunged on Friday after non-farm payrolls (NFP) data showed a loss of 92,000 jobs for February. This figure deviated significantly from the initial forecast of an increase of 50,000 positions. The unemployment rate also rose to 4.4%, raising concerns about a more serious economic slowdown.
The negative market sentiment was further exacerbated by the surge in Brent crude oil prices, which exceeded $89 per barrel due to the ongoing US-Iran war. Warnings from Qatar about the possibility of declaring force majeure that could push oil prices to $150 per barrel have put investors in a “risk-off” phase.
The transportation and retail sectors were hit hard, with shares of Royal Caribbean and giant retailers such as Walmart recording declines. Rising fuel costs are feared to weigh on corporate margins and drastically reduce consumer purchasing power in the near term.
Market strategists say the surge in energy prices has reignited inflation concerns that could force consumers to curb spending. However, the US as a net exporter of oil is seen as a buffer that could reduce the impact of the energy shock somewhat compared to a decade ago.
The Dow Jones is heading for its worst week since October last year with an overall decline of 2.1% this week. In contrast, the Nasdaq has shown greater resilience than other major indexes with a slim 0.4% gain, driven by the performance of the technology sector.
