US Equity Indexes Drop, Crude Oil Jumps With Treasury Yields as Mixed Iran Messaging Lifts Volatility

04:45 PM EDT, 03/26/2026 (MT Newswires) -- US equity indexes slumped on Thursday as divergent and confusing messaging about the state of discussions between Washington and Tehran to end the war lifted crude oil futures and government bond yields.

The Nasdaq Composite sank 2.4% to 21,408.08, with the S&P 500 down 1.7% to 6,477.16, and the Dow Jones Industrial Average 1% lower at 45,960.11. All but two sectors, energy and utilities, fell. Communication services and technology were standout decliners.

A US proposal to end almost four weeks of fighting is "one-sided and unfair", Reuters reported Thursday, citing a senior Iranian official. The official said the proposal, conveyed to Tehran by Pakistan, "was reviewed in detail on Wednesday night by senior Iranian officials and the representative of Iran's Supreme Leader".

Meanwhile, President Trump said it's up to Iranian leaders to convince him to end the Middle East conflict, CNN reported Thursday. Trump pointed out he isn't sure if the US can reach a diplomatic agreement with Iran, adding that Washington has additional targets "to hit before we leave."

Trump also said Thursday that Iran offered a total of 10 oil shipments as a "present" and goodwill gesture amid ongoing negotiations between the two countries. He described Iran as "great negotiators," and reiterated that talks to reach a ceasefire agreement are still underway.

This comes as the commander of the Islamic Revolutionary Guard Corps Navy in Iran, a key figure behind the near-total blockade of the Strait of Hormuz, has been killed, CNN cited Israeli Defense Minister Israel Katz as saying.

The US on Thursday issued new guidance to vessels navigating the Bab El-Mandeb Strait, which is located at the entrance to the Red Sea, warning that Iran-backed Houthi militants could start firing at commercial ships and tankers transiting the chokepoint.

"Although the Houthis have not attacked commercial ships since the Israel-Gaza ceasefire agreement in October 2025, the Houthis continue to pose a threat to US assets, including commercial vessels, in this region," the Maritime Administration said in its notice.

West Texas Intermediate crude oil futures jumped 3% to $92.91.

"Conflicting US-Iran signals on a potential ceasefire keep the geopolitical risk premium elevated," ING analysts said in a note. "Middle East disruptions continue to ripple through energy markets, with gas prices still more than 60% higher since the conflict began."

Most US Treasury yields advanced, with the 10-year up 8.4 basis points to 4.41% and the two-year higher by 9.9 basis points to 3.98%. The war in Iran will lead to a surge in inflation this year, as the closure of the Strait of Hormuz pushes up prices for oil, gas, and other commodities, the Organization for Economic Cooperation and Development said on Thursday.

The CBOE Volatility Index, also known as a fear gauge, jumped 8.3% to 27.44.

In precious metals, gold futures dropped 3.2% to $4,406.01 and silver futures slumped 5.5% to $68.77.

In economic news, US initial jobless claims rose to 210,000 in the week ended March 21 from 205,000 in the previous week, according to a US Labor Department report Thursday, as expected in a survey of analysts compiled by Bloomberg.

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