US market selloff continues as Iran war sends consumer sentiment plummeting

• The tech-heavy Nasdaq entered correction territory (down 10% from peak) on Thursday, while oil prices surged with Brent crude hitting $110 per barrel
• Consumer sentiment dropped 6% in March, with middle and higher-income groups experiencing particularly large declines; short-term economic expectations plunged 14%
• The OECD revised global GDP growth projections downward, warning that the conflict will impact the US more than any other industrialized nation due to supply chain disruptions through the Strait of Hormuz

Market Summary: US Selloff Deepens Amid Iran Conflict

Key Market Movements:

US markets experienced severe selling pressure on Friday, with the Dow falling over 400 points within the first hour of trading, briefly entering correction territory (10% below peak). The tech-heavy Nasdaq officially entered correction on Thursday, marking the worst selloff since the US-Israel war on Iran began. Brent crude oil surged to $110 per barrel.

Consumer Sentiment Collapse:

The University of Michigan's consumer sentiment survey (Feb 17-Mar 23) revealed a 6% monthly decline to the lowest level since December 2025. Short-term economic expectations plunged 14%, while middle-to-higher income consumers and stock holders experienced particularly sharp sentiment drops. Inflation expectations jumped from 3.4% to 3.8% – the largest one-month increase since April 2025 when tariffs were announced.

Policy Response:

President Trump extended a pause on Iranian energy strikes Thursday but faces declining consumer trust across all demographics and income levels. Trump maintains that markets will stabilize once the conflict ends, though investor confidence remains uncertain.

Economic Outlook:

The OECD downgraded global GDP growth projections, citing significant uncertainty from the Middle East conflict. The organization warned that potential closure of the Strait of Hormuz and damaged energy infrastructure will continue disrupting global energy and commodity supplies, including fertilizers. The US faces higher inflation risks than other industrialized nations, according to OECD analysis.

Market Implications:

Sustained volatility expected if the Iran conflict becomes protracted, with energy prices threatening to drive broader inflation and potentially triggering further equity market declines.