U.S. stock markets took a sharp hit Thursday (March 26), with the Nasdaq Composite sliding into correction territory as hopes for a ceasefire in the U.S.-Iran war continued to fade and oil prices pushed sharply higher.

The Nasdaq dropped nearly 2.4% by the close of trading, putting the index down 10.9% from its October all-time high. A drop of 10% or more from a recent peak is the standard definition of a market correction. The S&P 500 fell 1.7%, the Dow Jones Industrial Average tumbled 470 points, and the small-cap Russell 2000 also closed down 1.7%.

The pain spread across most of the tech sector. Six of the seven so-called Magnificent Seven mega-cap tech stocks closed lower. Nvidia led Dow decliners, falling more than 4%. Meta Platforms sank about 8% and Alphabet dropped roughly 3.5%, compounding losses tied to a landmark social media addiction lawsuit verdict this week. A Los Angeles jury found Meta and Alphabet liable for building addictive features into their platforms, in a case brought by a 20-year-old plaintiff who alleged that Instagram, Facebook, and YouTube caused mental health harm to children. Spokespeople for both companies said they would appeal the verdict.

Higher oil prices also contributed to the downturn. West Texas Intermediate crude futures, the U.S. oil benchmark, climbed 4.6% to around $94.50 a barrel. Brent crude, the global benchmark, rose above $100 a barrel, gaining nearly 5%. Since the war began at the end of February, U.S. crude prices are up more than 40%, and have climbed more than 60% since the start of the year. Heating oil, which serves as a proxy for jet fuel, spiked 8% on Thursday afternoon alone. The nationwide average price of a gallon of regular unleaded gasoline hit $3.98, up roughly $1 from before the conflict started.

President Donald Trump downplayed the price spikes at a Cabinet meeting in Washington.

"Energy prices have not gone up as much as I thought," President Trump said. He added that the military campaign is "not over, so maybe it'll go up a little bit more," but predicted that prices would eventually fall back.

President Trump also cast doubt on the prospects for a negotiated end to the conflict. "They are begging to work out a deal," he said of Iran. "I don't know if we'll be able to do that. I don't know if we're willing to do that." Earlier in the day, President Trump posted on his Truth Social network that Iranian negotiators "better get serious soon, before it is too late."

The mood in markets had been more hopeful on Wednesday (March 25), when indexes closed higher after a report in The New York Times suggested the U.S. had sent Iran a 15-point peace plan. That optimism evaporated overnight after Iranian foreign minister Abbas Araghchi said his country had no intention of negotiating. Adding further pressure, Israel claimed it had killed Iran's naval commander, Alireza Tangsiri, the figure credited with shutting down the Strait of Hormuz shipping lane.

Analysts say oil prices are likely to stay high for the long run. Even if a peace deal is reached, Investopedia noted that Goldman Sachs analysts believe some damaged liquified natural gas facilities could take three to five years to bring back online, keeping global energy supplies tight well into the future.

With peace talks still uncertain and energy prices showing no sign of a sustained pullback, investors will be watching closely for any signs of diplomatic progress in the days ahead.

This Morning With Gordon Deal