Dow Slides 700 Points After Shock Payroll Loss as Oil Surge Fuels Risk-Off

U.S. stocks fell sharply Friday morning as investors reacted to a shockingly weak February jobs report and a surge in oil prices tied to escalating Middle East tensions.

The Dow Jones Industrial Average dropped 718.44 points, or 1.50%, to 47,236.3, while the S&P 500 fell 87.99 points, or 1.29%, to 6,742.72 and the Nasdaq Composite declined 326.91 points, or 1.44%, to 22,422.1, at the opening bell.

The primary catalyst was the February labor report, which showed U.S. nonfarm payrolls unexpectedly fell by 92,000, sharply missing economists’ expectations for job growth of roughly 55,000 to 59,000. The unemployment rate edged up to 4.4%, while previous months’ payroll figures were revised lower by 69,000 jobs, suggesting the labor market has weakened more than previously believed.

The weak hiring data landed against an already fragile macro backdrop. At the same time, oil prices surged, with West Texas Intermediate crude rising more than 8% to about $87.79, as disruptions linked to the Middle East conflict threatened energy supply routes.

Bloomberg reported that shipping through the Strait of Hormuz—a key global oil chokepoint—had nearly halted, intensifying fears of broader supply disruptions and pushing crude to its highest levels in nearly two years.

Political tensions also escalated after President Donald Trump posted on Truth Social that there would be “no deal with Iran except unconditional surrender,” signaling a harder geopolitical stance that added to market uncertainty.

Federal Reserve officials signaled caution about overinterpreting the jobs data but acknowledged the shift in labor conditions. San Francisco Fed President Mary Daly said the report “has my attention,” while emphasizing that a single month does not define the broader trend.

The payroll surprise complicates the Fed’s policy outlook. While weaker employment could support eventual interest-rate cuts, wage growth remained firm at 0.4% month-over-month and 3.8% year-over-year, suggesting inflation pressures may persist.

Interest-rate markets still expect policymakers to hold steady at the upcoming March meeting. CME FedWatch data shows a 95.5% probability that the Fed keeps rates in the current 3.50%–3.75% range, with only a small chance of a cut.

The market reaction reflected a broader shift toward defensive positioning. Bond prices rose as investors sought safety, while commodities such as gold and oil gained amid geopolitical risk.

Investors now turn to upcoming Federal Reserve commentary and additional economic data to determine whether February’s jobs shock marks the beginning of a broader slowdown—or a temporary disruption.