Dow loses more than 780 points as oil tops $80 per barrel

Stocks closed Thursday with losses as the escalating war in Iran and the Middle East drove oil prices higher.

The Dow Jones Industrial Average closed with a loss of 784 points, a decline of 1.6 percent after falling more than 1,100 points earlier in the day. The S&P 500 index closed 0.6 percent lower, and the Nasdaq composite fell by 0.3 percent on the day.

The stock market’s swoon came as growing violence around the Persian Gulf and Iran’s efforts to restrict maritime trade fueled another surge in oil prices.

West Texas Intermediate crude, the baseline price for U.S. oil, eclipsed $80 per barrel Thursday, rising more than $5 on the day. Brent crude, a baseline price for international oil, rose more than $3 to hit more than $84 on Thursday.

As the largest producer of crude oil by volume in the world, the U.S. economy does not take the same economic hit from rising energy prices as it did before the country ramped up production throughout the 2000s and 2010s.

But U.S. consumers and businesses still feel the squeeze from rising energy costs, which are already pushing gasoline prices higher less than a week into the outbreak of the war.

The average price of a gallon of unleaded regular gasoline rose to $3.25 Thursday, according to AAA, up from $2.98 a week ago and $2.89 a month ago.

Higher oil costs also tend to push up airfares and other transportation services, along with the costs of products that require intense levels of energy to manufacture or ship abroad.

S&P 500-listed stocks for consumer staples fell 2.4 percent on the day as investors braced for Americans to pull back on their spending. Industrial and materials stocks also fell more than 2 percent each Thursday, while energy and technology stocks on the S&P squeaked out minor gains.

The war in Iran is quickly developing into another economic headache for President Trump and the Republican Party, who have faced blowback for their handling of the economy.

Rising energy prices could risk another inflation spike ahead of the midterm elections in November, which are already looking daunting for the GOP.

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