Day After Trump's $150 Million Defense Production Act Fuel Push, U.S. Crude Tops $100 and Dow Falls 800 Points at the Open

President Trump's Defense Production Act move on fuel has met a hard market on its first full trading day. West Texas Intermediate futures rose 1.4% to $100.90 a barrel Friday, Oct. 23, and Brent crude gained 0.75% to $114.

Trump invoked the Act on Thursday, announcing the government would spend $150 million to boost domestic gasoline and diesel production. The White House is trying to ease the pain at the pump with the midterm elections set for Nov. 3.

Oil and stocks at the open

Stocks opened lower Friday. The Dow Jones Industrial Average fell 805 points, or 1.5%. The S&P 500 dropped 0.6% and the Nasdaq slipped 0.3%.

CNBC's market coverage tied the oil move to reports that the U.S. and Israel may be drawing up plans for renewed attacks on Iran. The regional war began in late February. Oil's climb added pressure on equities, and investors were already uneasy after a Big Tech sell-off on Thursday.

That sell-off was a separate story. Traders were weighing how heavy corporate borrowing and rising rates affect AI and other tech names. CoreWeave, a data center company that leans heavily on borrowed money, fell 10% Thursday and was down less than 1% Friday.

The 10-year Treasury yield added 1 basis point to 4.9697%. Yields had dropped sharply Thursday as investors moved into government bonds as a safe haven.

Ed Yardeni of Yardeni Research called the AI trade a "bubble" on Thursday. "Taking some air out of the AI bubble is a good thing. I don't think it's going to burst and create problems for the economy," he said.

For the week, the S&P 500 was heading for a gain of less than 0.1%, the Nasdaq was down 0.5%, and the Dow was tracking a 1.7% advance.

What the administration has put on the table

The Defense Production Act spending is one of several fuel-cost measures Trump has announced in recent weeks. An Oct. 5 executive order directs the Treasury Department to consider temporarily deferring certain diesel excise tax payments and offering penalty relief to farmers, truckers and other affected taxpayers.

The order also directs the IRS to suspend certain penalties tied to dyed diesel use on highways through Dec. 31. The administration is exploring options for permanently forgiving the deferred taxes.

On Monday, Trump announced the Harvest Fuel Relief Program, which provides $8 billion to farmers to offset diesel costs during harvest. He said an estimated $400 million would go to Iowa farmers.

Trump promoted the diesel relief and the farm money at a Thursday night rally in Sioux City, Iowa, and touted the Defense Production Act move there as well.

The numbers sit side by side. The new production spending is $150 million, set against crude above $100 and Brent at $114. The administration has not published a projection of how much fuel the money would add or what it would do to pump prices.

The political clock

The politics are straightforward. Trump is campaigning on fuel costs while Election Day approaches. He holds a rally Friday afternoon in Fort Myers, Fla., for Rep. Byron Donalds, who is running for governor, and Sen. Ashley Moody, who is seeking a full Senate term.

In Iowa, he appeared with Senate nominee Ashley Hinson and gubernatorial nominee Zach Lahn, ahead of the Nov. 3 vote.

Seaport analyst Jay Goldberg added a separate warning on the tech side. He reiterated a sell rating on Nvidia with a $180 price target, well below Thursday's $212 close. He pointed to power and data center construction bottlenecks and the $250 billion in commitments Nvidia added last quarter. Seaport acknowledged its view "could be wrong."

The biggest uncertainty is the Iran conflict. If the reported plans for renewed strikes on Iran move forward, crude is likely to stay above $100 through Election Day. A $150 million production program would then be up against the very price level it was announced to relieve.