Wall Street stumbled on Friday as intensifying military conflict between Israel and Iran sent shockwaves through global markets, driving up oil prices and dragging major indexes sharply lower.
With the geopolitical risk premium back in full force, investors moved swiftly to de-risk portfolios amid rising fears of broader instability in the Middle East and its potential economic ripple effects.
Dow Sinks 750 Points as Risk-Off Mood Returns
The Dow Jones Industrial Average fell more than 750 points, down 1.87% by late morning, posting its worst single-day performance in weeks.
The S&P 500 lost 1.1%, while the tech-heavy Nasdaq Composite declined by 1.3%, led lower by major tech names and travel stocks.
U.S. futures had been pointing to a flat open until premarket reports confirmed that Israel launched precision strikes on Iranian nuclear and military assets overnight, triggering retaliatory drone and missile attacks from Tehran.
The news swiftly wiped out risk appetite and jolted global energy markets.
“This is the type of shock that resets the board,” said Lena Maxwell, chief strategist at Bryson Partners.
“It’s not just about military headlines—it’s about what this means for inflation, energy supply, Fed policy, and ultimately corporate earnings.”
Oil Prices Rocket Past $77
WTI crude oil soared over 7% to $77.14 a barrel, while Brent crude surged past $81, marking a multi-month high.
The spike in oil reflects growing concern over potential disruptions in Middle Eastern supply routes—particularly the Strait of Hormuz, through which roughly 20% of the world’s oil flows.
Energy stocks responded with strong gains:
-
Occidental Petroleum (OXY): +3.8%
-
ExxonMobil (XOM): +2.1%
-
APA Corp (APA): +3.7%
Investors flooded into oil-related assets as hedges against further disruption and inflation shocks.
Defense Stocks Rally, Airlines Tank
The conflict triggered a sharp rotation into traditional safe-haven sectors. Defense contractors surged on expectations of increased military spending and heightened global tensions:
-
Lockheed Martin (LMT): +3.4%
-
Northrop Grumman (NOC): +3.8%
-
RTX (RTX): +3.2%
Meanwhile, travel, leisure, and logistics stocks came under heavy selling pressure as higher fuel costs and geopolitical uncertainty clouded demand forecasts:
-
United Airlines (UAL): –4.1%
-
Delta Air Lines (DAL): –3.9%
-
Carnival Corp (CCL): –5.1%
-
Norwegian Cruise Line (NCLH): –4.3%
Fed Watch: Inflation Risks Back on the Radar
The Federal Reserve’s recent pause in rate hikes may face renewed scrutiny as oil prices jump and inflation fears resurface.
A key concern now is that higher energy prices could reverse some of the disinflationary progress made over the last two quarters.
“If oil remains above $75 for long, you’re likely to see it bleed into core CPI components,” said Raj Menon, macroeconomist at Shorebridge Analytics. “That could delay the Fed’s timeline for rate cuts—or even prompt renewed hawkishness.”
U.S. Treasury yields climbed in early trading, with the 10-year yield rising to 4.33%, as bond markets recalibrated expectations around inflation and policy tightening.
Gold, Volatility Jump
As investors looked for safe havens:
-
Gold climbed 1.6% to trade near $2,470 per ounce, a 3-month high
-
The VIX volatility index surged 18%, touching its highest level since April
-
Treasury demand spiked, though yields stayed elevated due to inflationary pressure
Global Markets React
-
European equities retreated, with the DAX, CAC 40, and FTSE 100 each falling around 1–1.2%
-
Middle Eastern bourses, including Tel Aviv, opened deep in the red but stabilized on energy sector support
-
Asian markets, which closed before the conflict escalated, are expected to open sharply lower on Monday
Market Snapshot (as of 11:15 AM ET)
| Asset | Value | Change |
|---|---|---|
| Dow Jones | 38,270.21 | –754.32 (–1.87%) |
| S&P 500 | 5,227.55 | –61.20 (–1.16%) |
| Nasdaq | 16,720.44 | –221.45 (–1.31%) |
| WTI Crude | $77.14 | +7.2% |
| Brent Crude | $81.04 | +6.8% |
| Gold | $2,470.20 | +1.6% |
| 10-Year Treasury Yield | 4.33% | +4bps |
| VIX (Volatility Index) | 17.82 | +18.3% |
The Bottom Line
With tensions flaring in one of the world’s most geopolitically sensitive regions, financial markets are once again being tested by forces outside the economic cycle.
While energy and defense sectors are seeing inflows, broader risk assets are struggling under the weight of uncertainty.
For investors, the message is clear: geopolitics is back at the center of the market narrative—and the next few days could set the tone for the summer.
Also Read
Defense Demand Surges: Lockheed Martin in Focus Amid Israel-Iran Conflict
Visa Stock Plunges Amid Market Turmoil and Disruption Fears