US shares plunge as oil prices surge

New York City — US share indices closed with sharp declines on Thursday, 12 March, triggered by a sharp rise in oil prices.

The Dow Jones Industrial Average fell 1.56% to 46,677.85. The S&P 500 declined 1.52% to 6,672.62. The Nasdaq Composite index dropped 1.78% to 22,311.98.

Eight of the 11 major sectors within the S&P 500 ended in negative territory, led by the industrial sector and non-essential consumer goods, each falling 2.52% and 2.21% respectively. The energy and utilities sectors were the two sectors that recorded significant gains, rising 0.98% and 0.73% respectively.

West Texas Intermediate (WTI) crude oil futures contracts for April delivery, which serve as the benchmark for US oil, surged 9.72% to $95.73 per barrel.

This increase was driven by comments from Iran’s new supreme leader, Mojtaba Khamenei, who stated that the closure of the strategically vital Strait of Hormuz would continue “as a tool to pressure enemies”.

To help mitigate the impact of rising energy costs, US Energy Secretary Chris Wright announced on Wednesday, 11 March, that the United States would release 172 million barrels of oil from the Strategic Petroleum Reserve. This release is estimated to take approximately 120 days to complete.

Honda Motor fell more than 5% after the Japanese automaker warned that expenditures and losses related to its re-evaluated electric vehicle strategy were estimated to reach up to 2.5 trillion yen, and revised its fiscal year projection to a net loss instead of a profit.

In post-earnings trading, Petco Health & Wellness shares surged nearly 35%, whilst Dollar General shares fell 6.14%. Adobe, scheduled to report results after market close, declined 1.43%.