U.S. equities ended Friday lower as a combination of rising geopolitical tensions and fresh signs of softness in the labor market unsettled investors. The sell-off came as oil prices surged sharply following developments in the Middle East, raising concerns that higher energy costs could complicate the outlook for inflation and interest rates.

Market sentiment weakened after the latest U.S. payrolls data pointed to slowing momentum in the labor market. The disappointing report added to worries that economic growth may be cooling at a time when geopolitical risks are pushing commodity prices higher. This combination has increased uncertainty around the Federal Reserve’s policy path, with investors questioning whether the central bank will have enough room to begin cutting rates if inflation pressures return.

Major indexes closed broadly lower. The Dow Jones Industrial Average dropped 0.95% to 47,501.55, marking its biggest weekly decline since April 2025. The S&P 500 fell 1.33% to 6,740.00, recording its worst week since October, while the Nasdaq Composite slid 1.59% to 22,387.68. Smaller-cap stocks were also hit, with the Russell 2000 posting its sharpest weekly fall since August.

Energy markets were at the center of the volatility. Oil prices surged after military tensions involving the United States, Israel, and Iran disrupted shipping activity through the Strait of Hormuz, a critical global energy route. U.S. crude futures jumped more than 12% to above $90 per barrel, while Brent crude rose roughly 8.5% to around $92. Analysts warned that continued disruptions could push oil toward the $100 mark, adding another layer of uncertainty for global markets.

The jump in energy prices also pushed volatility higher. The Cboe Volatility Index (VIX) climbed to 29.49, its highest level since 2022, reflecting rising investor anxiety. Higher oil prices increase costs for businesses and consumers, raising concerns about profit margins and tighter financial conditions.

Sector performance reflected these pressures. Bank stocks came under selling pressure, with the S&P 500 Banks Index falling more than 2%. Financial firms faced additional headlines, including declines in shares of asset manager BlackRock and investment bank Jefferies following company-specific developments. Travel-related stocks also dropped as the surge in fuel costs weighed on airline profitability expectations.

On the other hand, energy companies saw modest gains as stronger oil prices improved revenue outlooks for the sector. Safe-haven demand also lifted gold prices by about 1.8%, while bitcoin moved lower by more than 4% amid the broader risk-off sentiment.

Despite the broader market weakness, a few individual stocks stood out. Semiconductor firm Marvell Technology rallied sharply after projecting stronger-than-expected long-term revenue growth.

Overall trading activity was elevated, with nearly 20 billion shares changing hands on U.S. exchanges, well above the recent average. Investors are likely to remain focused on developments in the Middle East and upcoming economic data, both of which could shape market direction in the weeks ahead.

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