Oil Price Surge Weighs Heavily on Wall Street Stocks

Sharp drops for Alphabet and Tesla weighed on Wall Street Thursday, sending the S&P 500 to its worst loss in a month. The Dow Jones Industrial Average dropped 506 points, or 1%, and the Nasdaq composite sank 2.2%. Rising oil prices put pressure on businesses, eroding their customers' ability to spend.

The price for a barrel of Brent crude oil jumped 7% to settle at $100.69, its highest price since May. The increase was caused by attacks on two Saudi oil tankers in the Red Sea, which threaten another route that oil companies use to move crude from the Middle East to customers worldwide.

President Donald Trump threatened 'major military punishment' against the Houthi rebels in Yemen if they continue attacking ships. This has raised concerns about inflation and potential interest rate hikes by the Federal Reserve. The European Central Bank held its main interest rates steady at its meeting Thursday, but traders are betting on a 36% chance of a Fed rate hike next week.

Higher oil prices pushed up long-term U.S. mortgage rates to their highest levels in nearly a year. Gasoline prices also rose, with an average gallon costing $4.09 across the United States, according to AAA. Stocks of companies with big fuel bills fell sharply on worries about higher expenses.