Michael Gagliano works on the floor at the New York Stock Exchange in New York on Friday. (AP Photo/Seth Wenig)

NEW YORK (AP) — Oil shot to its highest price since 2023 after surging again Friday because of the Iran war, and a weak update on the U.S. job market knocked stocks lower to cap Wall Street’s worst week since October.

The S&P 500 dropped 1.3% after a report showed U.S. employers cut more jobs last month than they created and after oil prices spiked above $90 per barrel. The combination of a weak economy and high inflation is a worst-case scenario for investors because the Federal Reserve has no good tool to fix both problems at the same time.

The Dow Jones Industrial Average plunged as many as 945 points before finishing with a loss of 453, or 0.9%, and the Nasdaq composite sank 1.6%.

“You can’t sugarcoat this report,” according to Brian Jacobsen, chief economic strategist at Annex Wealth Management. “A negative payrolls number combined with a big jump in oil prices will have traders worrying about stagflation risks.”

Stagflation is what economists call the miserable mix of a stagnating economy with high inflation, and a separate report released Friday added to the sourness after showing that U.S. retailers made less money in January than economists expected. It raised the disconcerting possibility that spending by U.S. households, the main engine of the economy, may be stretched near its maximum.

Usually when the economy is unsteady and the job market is weakening, the Federal Reserve cuts interest rates to give things a boost. Lower rates can make it easier for households to get mortgages and for companies to raise money to expand, while also lifting prices for stocks and other investments. The Fed cut its main interest rate several times last year and had indicated more were to come this year.

But lower interest rates can also make inflation worse. And the Fed’s hands may be increasingly tied because spiking oil prices are pushing inflation higher due to disruptions for the energy industry.

The price for a barrel of Brent crude, the international standard, leaped another 8.5% to settle at $92.69. It briefly rose above $94 to touch its highest level since September 2023.

A barrel of benchmark U.S. crude breached the $90 level for the first time since 2023 and jumped 12.2% to $90.90.

Oil prices have surged, with Brent up from near $70 late last week, as the war has expanded and included areas critical to the production and movement of oil and gas in the Middle East. Much will depend on what happens with the Strait of Hormuz off Iran’s coast, where roughly a fifth of the world’s oil typically sails.

The U.S. government gave details Friday about a plan President Donald Trump announced earlier to offer insurance to ships crossing the strait, but it had little effect on the market.