U.S. stock indexes closed sharply lower on Thursday, March 26, 2026, as geopolitical tensions and a steep decline in semiconductor shares rattled investors. The Nasdaq 100 fell to a 6.5-month low, leading the market’s retreat.
Geopolitical Tensions Drive Sell-Off
Escalating rhetoric around the conflict with Iran fueled a sharp rise in oil prices, which in turn pressured equity markets. WTI crude oil prices jumped more than 4% during the session. The surge followed an Axios report that the Pentagon is developing extensive military options against Iran.
President Trump issued a warning, stating Iran had “better get serious soon, before it is too late.” The closure of the Strait of Hormuz, a critical chokepoint for global oil shipments, continues to disrupt energy supplies. The International Energy Agency has warned the conflict is disrupting 7.5% of global oil supply.
Higher bond yields also undercut stocks. The 10-year Treasury note yield rose by roughly 9 basis points to 4.42%, as rising oil prices boosted inflation expectations.
Semiconductor Sector Under Pressure
A significant drag on the technology-heavy Nasdaq came from semiconductor stocks. The sector sold off following news of a new data compression technique proposed by Google researchers, which market participants interpreted as a potential headwind for memory chip demand related to artificial intelligence workloads.
Several major chipmakers saw steep declines. Sandisk closed down more than 9%. Lam Research and Applied Materials each fell more than 8%. Advanced Micro Devices, Seagate Technology, and Western Digital all dropped more than 7%.
Broader Market and Economic Data
The weakness extended to other mega-cap technology stocks, often called the Magnificent Seven. Meta Platforms closed down more than 7%, while Alphabet fell more than 3%. Analysts cited ongoing litigation risks over social media design as a concern for the year.
Economic data released Thursday presented a mixed picture. U.S. weekly initial unemployment claims rose slightly to 210,000, matching expectations. However, continuing claims fell to a 1.75-year low of 1.819 million, indicating ongoing labor market strength.
The March Kansas City Fed manufacturing activity survey unexpectedly rose to an 11, a 3.5-year high. The Organization for Economic Cooperation and Development raised its 2026 G-20 inflation forecast to 4.0%, citing the war’s impact.
Sector Movers and Notable Stocks
Energy stocks were among the few gainers, buoyed by the jump in crude prices. Valero Energy rose more than 5%, and Occidental Petroleum gained over 4%.
Mining stocks retreated as precious metals prices fell sharply. Coeur Mining dropped more than 9%. MillerKnoll plunged over 22% after reporting weaker-than-expected quarterly earnings and guidance.
On the positive side, Kodiak Sciences surged more than 75% after releasing positive late-stage trial data for a diabetic retinopathy drug. Brown-Forman jumped over 9% on reports of potential acquisition interest.
Market Outlook and Fed Policy
The market is currently discounting a low probability of a Federal Reserve interest rate hike at its next policy meeting. However, the combination of persistent inflation pressures from energy and a still-strong labor market leaves monetary policy uncertainty elevated.
Overseas markets also closed lower. The Euro Stoxx 50 fell 1.48%, while China’s Shanghai Composite dropped 1.09%. The war’s disruption to global supply chains and energy markets remains a primary concern for investors worldwide. Analysts note that prolonged closure of key shipping lanes could have lasting effects on global trade flows.
For more information on energy market disruptions, see the International Energy Agency. Details on Treasury market activity are available from the U.S. Treasury Department.
This article was produced with AI assistance and reviewed by our editorial team for accuracy and quality.
