Wall Street falls to its worst drop since the Iran war as the Nasdaq sinks 10% below its record

The Dow Jones Industrial Average dropped 469 points, or 1%, and the Nasdaq composite sank 2.4% to fall more than 10% below its all-time high set early this year. That's a steep enough drop that professional investors have a name for it: a “correction.”

Stock markets likewise tumbled across much of Asia and Europe. They’re the latest flip - flops for financial markets in a week that began with big hopes after President Donald Trump said productive talks had taken place about ending the war. But Iran denied direct talks were underway and then dismissed a U.S. proposal for a ceasefire that was delivered via Pakistan.

On Thursday, the fighting continued, and thousands more U.S. troops neared the region. Iran, meanwhile, tightened its grip on the crucial Strait of Hormuz. It may be creating something like a “toll booth” for tankers to get past the narrow waterway, which typically sees a fifth of the world’s oil exit the Persian Gulf through it to customers worldwide.

The price for a barrel of Brent crude oil climbed 4.8% to settle at $101.89 as hopes dimmed for a potential return to normal for the strait. That’s up from roughly $70 before the war began. Benchmark U.S. crude rose 4.6% to $94.48 per barrel.

“They better get serious soon, before it is too late,” Trump said on his social media network Thursday morning about Iran’s negotiators, “because once that happens, there is NO TURNING BACK, and it won’t be pretty!”

Just minutes after Wall Street finished its trading for the day, Trump softened his talk a bit. He said he was delaying his threat to “obliterate” Iranian power plants to April 6, allowing more time for talks.

“Talks are ongoing and, despite erroneous statements to the contrary by the Fake News Media, and others, they are going very well.”

After that, oil prices trimmed some of their gains, and Brent crude fell back toward $100 per barrel. Treasury yields also pared their big jumps in the bond market.

High Treasury yields and disruption in the bond market were big factors that Trump named a year ago when he backed off his initial threats for global tariffs made on “Liberation Day.” The moves caused critics to allege Trump always chickens out, or “TACO,” if financial markets show enough pain.

The yield on the 10-year Treasury jumped as high as 4.43% Thursday from 4.33% late Wednesday and from just 3.97% before the war started. That’s a significant leap for the bond market, and it’s already sent rates higher for mortgages and other kinds of loans for U.S. households and businesses, which slows the economy.

A report on Thursday morning said slightly more U.S. workers filed for unemployment benefits last week, though the number is still low compared with historical figures.

A slowing job market would typically encourage the Federal Reserve to cut interest rates to juice the economy. But hopes have cratered on Wall Street for a possible cut to interest rates this year, even though traders came into 2026 forecasting several. That’s because lower interest rates carry the risk of worsening inflation, and the spike in oil prices has heightened those worries.

On Wall Street, tech stocks were the heaviest weights on the market.

Meta Platforms fell 8%, and Alphabet sank 3.4% after each had held relatively steady the day before, when a jury found Instagram and YouTube liable in a landmark social-media addiction trial.

The financial penalties were small compared with the companies’ vast profits, but it could herald a watershed moment that invites more lawsuits.

Other Big Tech stocks also fell, including drops of 4.2% for Nvidia and 2% for Amazon. Apple was an outlier and inched up 0.1%.

Commercial Metals fell 4.7% after the maker of steel rebar and other products reported a weaker profit for the latest quarter than analysts expected. CEO Peter Matt said bad weather hurt its North American operations during the quarter, but underlying market conditions looked favorable.

All told, the S&P 500 fell 114.74 points to 6,477.16 and is 7.2% below its all-time high set a couple months ago. The Dow Jones Industrial Average dropped 469.38 to 45,960.11, and the Nasdaq composite sank 521.74 to 21,408.08.

In stock markets abroad, Germany’s DAX lost 1.5%, Hong Kong’s Hang Seng sank 1.9% and South Korea’s Kospi dropped 3.2%. Japan’s Nikkei 225 had one of the world’s milder losses, at 0.3%.

AP Business Writers Chan Ho-him and Matt Ott contributed.