Oil prices rise 5%, and Dow drops 500 points after Trump says ceasefire with Iran is ‘over’
Posted/updated on: July 8, 2026 at 1:12 pm
NEW YORK (AP) — Oil prices are rising, and stock markets are dropping worldwide Wednesday after President Donald Trump raised doubts about the temporary truce in the war with Iran.
The S&P 500 fell 0.3% after Trump said the agreement to pause fighting was “over,” though he added that he would allow negotiations to continue. The Dow Jones Industrial Average was down 562 points, or 1%, as of 1:36 p.m. Eastern time, and the Nasdaq composite was 0.1% higher, thanks to gains for several big AI stocks including Nvidia.
The action was stronger in the oil market, where the price for a barrel of Brent crude climbed 5.8% to $78.43. That’s well below its peak from earlier in the war, when the price for the most actively traded contract reached nearly $120. But the jump is unsettling because oil prices had just dropped back to where they were before the war.
The worry is that a continuation of the war will block the Strait of Hormuz and prevent the delivery of crude from the Persian Gulf to customers worldwide. That could worsen inflation, which economists expected would ease with oil prices, and in turn force the Federal Reserve and other central banks to raise interest rates.
Higher rates can keep a lid on inflation, but they also slow the economy and hurt prices for all kinds of investments.
Losses for stock markets in Europe accelerated, and oil prices climbed immediately after Trump said, “For me, I think it’s over” about the status of the ceasefire. He added that U.S. representatives can continue negotiations, “but I think they’re wasting their time.”
Trump later said the United States was preparing for another night of strikes against Iran.
On Wall Street, companies with big fuel bills fell sharply. American Airlines lost 3.3%, and United Airlines fell 2.1%.
Stocks of companies in the housing industry were also weak. They were hurt by worries that rising Treasury yields in the bond market will lead to higher rates for mortgages and chill the industry.
Builders FirstSource, which sells countertops, windows and other building supplies, fell 3.6%. Homebuilders PulteGroup fell 4.1%, and D.R. Horton sank 4%.
Drops of 3.4% for Sherwin-Williams and 2.5% for Home Depot were two of the biggest reasons the Dow was heading toward its worst loss in about a month.
Helping to offset those losses was a steadying for some influential stocks in the artificial-intelligence industry. They’ve been under pressure in recent weeks on worries that their prices shot too high and that AI may not produce enough productivity and profits to make all the investments in chips and data centers worth it.
Their swings carry a lot of weight on Wall Street because AI stocks have grown into some of the U.S. market’s biggest, giving their movements more effect on the S&P 500 than other stocks.
Nvidia rose 3%, for example, and was the strongest force pushing upward on the S&P 500 because it’s the largest stock on Wall Street.
Another strong push upward on the market came from Broadcom, which rose 5.9%. Apple announced a multiyear commitment with Broadcom to design and produce custom components for its products. Apple said the agreement’s value could top $30 billion.
In the bond market, Treasury yields rose with the price of oil. The yield on the 10-year Treasury climbed to 4.58% from 4.55% late Tuesday and from just 3.97% before the war with Iran began.
In stock markets abroad, losses for European markets worsened after Trump made his comments, and Germany’s DAX lost 2.2%.
In Asia, South Korea’s Kospi dropped 5.3% and continued its sharp swings amid dueling worries and euphoria about the AI stocks that dominate its market.
Hong Kong’s Hang Seng index was an outlier and rose 3%.
Shares that trade in Hong Kong of Chinese AI startup Zhipu, known also as Z.ai and traded as Knowledge Atlas Technology, jumped 13.4%.
A six-month lock-up period for “cornerstone” investors following its January trading debut in Hong Kong expires this week. China National Radio reported late Tuesday that nearly 70% of Zhipu’s cornerstone investors are committed to stay on, despite previous worries that the lock-up period expiration could trigger a sell-off.
Zhipu’s share price has risen more than 1,300% since its debut.
