Wall Street wakes up

The Dow fell over 1,200 points this morning before paring losses to close down 403, or 0.83%. The S&P 500 lost 0.94% and the Nasdaq shed 1.02%. The VIX, Wall Street's fear gauge, jumped 9% and hit its highest level in three months. In Europe, the Stoxx 600 fell 3.08%. In South Korea, the KOSPI plunged 7.24%, its worst session since April. Gold, the supposed safe haven, dropped 5%.

Oil was the story of the day. Brent rose 5.8% to $82 per barrel, with WTI up 5.9%. In the United States, the average price of petrol rose 12 cents in a single day, the largest spike in four years. European natural gas surged 20% after a 38% jump on Monday. Diesel futures climbed 12% for the second consecutive day. Traders are pushing expectations for the next Fed rate cut into the summer. Inflation, already too high, now has a new accelerant.

In the afternoon, Trump posted on Truth Social that the US Navy would escort tankers through the Strait of Hormuz if necessary: "No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD." Markets trimmed losses after that. Carson Group compiled a list of 40 major geopolitical events over the past 85 years: on average, the S&P 500 loses 0.9% in the first month but gains 3.4% over the following six. History is history, but the statistic assumes wars end. Trump said last night that wars "can be fought forever, and very successfully." The markets still do not know what to do with that.