Selling in U.S. stocks picked up steam by midday as oil prices continued to climb after after Iran said it hit an oil tanker with a missile off the coast of Iraq.
The missile strike signals wider risks to shipping in the Persian Gulf, beyond the Strait of Hormuz. Iran said earlier it closed the Strait of Hormuz, which about a fifth of the world's oil and liquified natural gas passes through. Though President Donald Trump offered U.S. Navy ships as escorts through the waterway, shipping bottlenecks are stalling oil and container ships. The blockages limiting supply pushed oil prices up to the highest level since June 2025.
Most analysts and economists aren't yet worried the recent rise in oil prices will drastically push inflation higher, but they acknowledge the longer the disruption, the higher the chances inflation will flare.
"The situation is highly uncertain but, if WTI (West Texas oil) remained near $80 for a few months before drifting down over the rest of the year, then the peak direct impact," on inflation may be only about 0.3%, said Stephen Brown, deputy chief North America economist at research firm Capital Economics.
At 11:59 A.M. ET, the blue-chip Dow was down 1.57%, or 764.64 points, to 47,974.77, and the broad S&P 500 slid 0.66%, or 45.32 points, to 6,824.18. The tech-heavy Nasdaq dropped 0.3%, or 69.44 points, to 22,738.044. Meanwhile, West Texas oil jumped 6.34% to $79.39 per barrel.
