U.S. stock markets declined in early trading, pressured by a weaker-than-expected U.S. non-farm payrolls report, while escalating Middle East conflicts pushed energy prices higher and fueled inflation concerns.

At 9:39 AM New York time, the S&P 500 index was down 1.5%, with all sectors except energy trading lower. For every advancing stock in the benchmark index, seven stocks declined. The Nasdaq 100 index fell 1.4%, and the Dow Jones Industrial Average dropped 1.8%. U.S. stocks were on track for their worst weekly performance since last October.

U.S. non-farm payrolls decreased by 92,000, one of the largest declines since the COVID-19 pandemic, partly due to job losses in the healthcare sector resulting from strike activity. The unemployment rate rose to 4.4%. This may shift the Federal Reserve's focus back to the labor market.

Ellen Zentner of Morgan Stanley Wealth Management commented, "Today's data may put the Fed in a difficult position. A significantly weaker labor market would support a rate cut, but with oil prices potentially staying higher for longer and sparking another round of inflation, the Fed may have to choose to hold steady."

Brian Jacobsen, Chief Economic Strategist at Annex Wealth Management, stated, "This report cannot be sugar-coated. Negative job growth, combined with a sharp rise in oil prices, will raise concerns among traders about stagflation risks."

Andy Schneider of BNP Paribas noted, "The February jobs report preceded the Iran conflict, but the recent spike in oil prices increases the likelihood of stronger energy inflation ahead. Risks to our overall inflation forecast are tilted to the upside."

Middle East tensions have intensified concerns about global energy shortages: exporting nations are scrambling to find transport routes, while a number of refineries have cut production. Near standstill traffic through the Strait of Hormuz has led to regional storage tanks filling up, creating waves in energy markets.

The fear gauge, the VIX, reached 28 after U.S. President Trump ruled out a deal to end the war, stating he wanted Iran to surrender unconditionally.