Dow Jones slips 250 points: here’s why US stocks opened lower

US stocks opened lower on Thursday, reversing the previous session’s gains as investors remained cautious about developments in the Middle East and the uncertain path toward de-escalation.

Dow Jones Industrial Average fell 256 points, or 0.5%, while the S&P 500 index declined 0.7% and the Nasdaq 100 index dropped 1%.

The pullback comes after Wall Street closed higher on Wednesday, supported by hopes that diplomatic efforts between the United States and Iran could ease tensions. 

However, conflicting signals from both sides have kept investors on edge.

Oil surge and mixed signals weigh on sentiment

Crude prices moved sharply higher on Thursday, adding pressure to equities. 

Brent crude rose 3.8% to $106.07 per barrel, while West Texas Intermediate climbed 3.5% to $93.45.

Investor uncertainty has been fueled by contradictory messaging from Washington and Tehran. 

US President Donald Trump said Iran was eager to strike a deal, while Iran’s foreign minister indicated that, although a US proposal is under review, Tehran has no intention of engaging in talks.

Trump wrote that Iran “better get serious soon, before it is too late, because once that happens, there is NO TURNING BACK, and it won’t be pretty.” He also described Iranian negotiators as “very different” and “strange,” adding they were “begging” the US to make a deal.

The lack of clarity has left markets highly sensitive to headlines. 

Economic risks and policy outlook in focus

The broader economic implications of the conflict are also coming into sharper focus. 

The OECD warned that escalating tensions have already disrupted global growth, with a potential closure of the Strait of Hormuz posing a significant risk to inflation.

Central banks are facing increasing challenges as a result. 

Money market participants are no longer pricing in any interest rate cuts from the Federal Reserve this year, compared with expectations for two cuts before the conflict, according to CME Group’s FedWatch Tool.

Economic data released Thursday showed that initial jobless claims rose by 21,000 in the week ended March 21, in line with expectations.

Investors are also monitoring comments from Federal Reserve officials Lisa Cook, Stephen Miran, Michael Barr, and Philip Jefferson for further clues on the policy outlook.

Stocks in focus and sector moves

Among individual stocks, shares of Olaplex Holdings surged 50% after Germany’s Henkel agreed to acquire the hair-care brand in a $1.4 billion deal.

Gold miners declined as bullion prices fell more than 1.5%, with Newmont down 2%, Sibanye Stillwater down 3.6%, and Harmony Gold down 3%.

Stocks of memory chipmakers like SanDisk, Micron, Western Digital and Seagate Technologies fell between 2% and 3% after Google announced a new AI model which will reduce the memory required for large language models to function.

Analysts say markets are increasingly being driven by geopolitical developments rather than fundamentals. 

With oil prices rising and diplomatic signals remaining mixed, investors are likely to stay cautious as they navigate a volatile and headline-driven market environment.