U.S. stock markets experienced significant volatility on March 5, with the three major indices closing lower. The Dow Jones Industrial Average plunged nearly 800 points, while international oil prices soared. Notably, a major AI company bucked the downward trend to close higher.
Investor sentiment turned cautious due to escalating geopolitical risks in the Middle East and the Federal Reserve's maintenance of high interest rates, leading to sharp market movements. The Dow Jones Industrial Average fell by 784.67 points, or 1.61%, closing at 47,954.74 after briefly dropping more than 1,100 points during the session. The Nasdaq Composite declined by 58.50 points, or 0.26%, to 22,748.99. The S&P 500 dropped 38.79 points, or 0.56%, ending at 6,830.71.
Goldman Sachs Group and Caterpillar led the declines on the Dow, each falling more than 3%. Most of the seven major U.S. tech stocks closed lower, with Meta Platforms down over 1% and Apple declining 0.85%.
Geopolitical tensions in the Middle East fueled a sharp rise in international oil prices. During the trading session, WTI crude oil surged as much as 8%, breaking above $82 per barrel to reach its highest level since July 2024, before paring gains later. It was last quoted at $79.57 per barrel. Brent crude rose 3.57% to $84.31 per barrel, marking a weekly increase of over 17%.
U.S. Interior Secretary Doug Burgum stated that the administration is evaluating a range of options to address soaring oil and gasoline prices amid the Iran conflict. He mentioned that all possibilities are under consideration, including measures with immediate effects and more complex, long-term solutions. Following a private meeting with senior advisors, plans were announced to provide insurance guarantees and deploy naval escorts to ensure the safe passage of tankers and other vessels through the Strait of Hormuz. Other potential actions include releasing crude from the U.S. Strategic Petroleum Reserve, possibly in coordination with other nations. However, no decision has been made to tap the reserve yet.
In related news, Iran's Armed Forces reported that the U.S. aircraft carrier USS Abraham Lincoln was struck by an Iranian naval drone in the Sea of Oman, approximately 340 kilometers from Iranian waters. The carrier and its accompanying destroyers subsequently retreated over 1,000 kilometers from the area.
Defying the broader market decline, AI giant Broadcom saw its shares rise 4.79%, closing with a market capitalization of $1.5757 trillion. The company issued strong demand guidance, with CEO Hock Tan highlighting robust market demand for its chips amid the AI boom. He told analysts that he expects AI chip revenue to "significantly exceed $100 billion" by 2027, far surpassing many Wall Street forecasts. Following Tan's comments that six clients are nearing 10 gigawatts of capacity, analysts see further upside potential.
J.P. Morgan analysts estimate that the company could generate $12 to $15 billion in revenue per gigawatt by 2027 and have conservatively raised their AI revenue forecast for Broadcom to $1.2 trillion or more. Goldman Sachs analysts noted that Broadcom's leadership in AI networking and custom chips allows its hyperscale customers to achieve the lowest inference costs, expecting it to continue reducing costs in line with market leader NVIDIA.