TORONTO – Canadian and U.S. stock markets moved lower on Monday, while oil prices jumped following escalations in the Middle East that may be undermining the ceasefire in Iran.
“Markets came into the week focused on earnings, but today oil and geopolitics are actually stealing the spotlight,” said Anish Chopra, managing director with Portfolio Management Corp.
“What we have is the market being pulled between two stories. You’ve got earnings that are reasonably constructive, but higher oil prices are forcing investors to rethink inflation and the interest rate outlook.”
The S&P/TSX composite index was down 252.31 points at 33,638.87.
In New York, the Dow Jones industrial average was down 557.37 points at 48,941.90. The S&P 500 index was down 29.37 points at 7,200.75, while the Nasdaq composite was down 46.64 points at 25,067.80.
Oil prices jolted higher after the United Arab Emirates, a U.S. ally, said it came under attack by Iran for the first time since the ceasefire took hold in early April. The attacks appeared to be in response to U.S. President Donald Trump’s latest efforts to reopen the Strait of Hormuz.
The June crude oil contract was up US$4.48 at US$106.42 per barrel. The price for a barrel of Brent crude leaped 5.8 per cent to settle at US$114.44.
Iran’s closure of the strait has kept oil tankers pent up in the Persian Gulf and away from customers worldwide.
Trump said on Sunday that the United States would guide ships through the strait, which could get oil flowing again and bring down its price. But prices instead climbed with uncertainty about what would happen next.
The U.S. military said Monday that two American-flagged merchant ships had successfully transited the waterway. It also said that it sank six small boats as it set up an “enhanced security area” for ships crossing the strait.
Hope is still high on Wall Street that the global economy can avoid a worst-case scenario because of the war. And in the meantime, companies continue to deliver big growth in profits. That’s key because stock prices tend to follow the path of corporate profits over the long term.
In the bond market, Treasury yields jumped with the price of oil. The yield on the 10-year Treasury rose to 4.43 per cent from 4.39 per cent late Friday. It was at just 3.97 per cent before the war began, and the rise has made mortgages and other kinds of loans for U.S. households and businesses more expensive.
“It’s really the oil price driving investors’ assessment of inflation, and then inflation directly feeds into investors’ assessment of interest rates into the future,” Chopra said.
“Investors are very concerned that this could be longer lasting; the oil price will stay up here for longer than they had once thought.”
Meanwhile, the strength so far this earnings reporting season has been broad-based and not confined to just the Big Tech superstars that dominate the market. The median stock in the S&P 500 is tracking for the best growth since 2021, according to Savita Subramanian, a strategist at Bank of America.
The Canadian dollar traded for 73.47 cents US compared with 73.66 cents US on Friday.
The June gold contract was down US$111.20 at US$4,533.30 an ounce.
This report by The Canadian Press was first published May 4, 2026.
— With files from The Associated Press
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
