Global financial markets ended the week deep in the red as Iran launched over 100 missiles and drones at Israel in a retaliatory strike following Israeli attacks on key Iranian nuclear and missile sites. Explosions were reported over Tel Aviv and Jerusalem late Friday, with air raid sirens heard across Israel, sparking fears of a broader military conflict in the Middle East.
The geopolitical shockwave instantly spooked investors. Wall Street saw its sharpest single-day loss in over a month.
The S&P 500 fell 1.14%, or 68.92 points, closing at 5,976.34, while the Nasdaq Composite lost 1.29% to end at 19,407.49.
The Dow Jones Industrial Average plunged 768.73 points, or 1.79%, to finish at 42,198.89.
Oil Prices Surge as Supply Concerns Grow
Oil markets reacted swiftly to the heightened tension. Brent crude jumped nearly 9%, nearing $84 a barrel, while WTI rose similarly.
Fears that the Strait of Hormuz—a key oil transit chokepoint handling about a third of the world’s seaborne crude—could be disrupted led to panic buying.
“Markets are now factoring in the possibility of a prolonged conflict that could directly impact global oil flows,” said Elias Haddad, senior strategist at Brown Brothers Harriman.
As a result, U.S. energy stocks rallied, with ExxonMobil and Diamondback Energy both up by more than 3%. The Energy Select Sector SPDR Fund (XLE) gained 1.5%, its best day in weeks.
Defense Stocks Gain, Airlines Dive
Investors poured money into defense-related stocks amid expectations of increased military spending.
Lockheed Martin, RTX Corporation, and Northrop Grumman all advanced around 2–3% as the situation unfolded.
On the flip side, airline stocks suffered, with carriers like Delta, United, and American Airlines dropping between 3% and 5%, driven by concerns over surging fuel costs and disrupted flight routes.
Gold and Bonds: Investors Seek Safety
With risk aversion rising, investors sought refuge in traditional safe havens. Gold prices surged above $2,450 an ounce, touching a new high, while U.S. Treasury yields fell, indicating strong demand.
The 10-year yield dropped to about 4.3%, as the dollar wavered against other safe-haven currencies like the Swiss franc and Japanese yen.
Gold, in particular, outshone the dollar and Treasuries as the new “risk-free” asset, analysts noted, reflecting deepening investor anxiety over geopolitical fallout.
Mixed Corporate Signals
In tech, Adobe fell despite raising its annual revenue forecast, as investors questioned the pace of its AI integration.
In contrast, Oracle surged to an all-time high on the back of strong demand for its AI-based cloud services.
Meanwhile, Visa and Mastercard slid over 4% following reports that major retailers are exploring crypto solutions that could bypass traditional payment processors.
What Lies Ahead
While recent inflation data and jobless claims had helped calm nerves earlier in the week, the Iran–Israel conflict has reignited global uncertainty.
The U.S. Federal Reserve is expected to keep interest rates steady in its upcoming meeting, but geopolitical risks may now play a larger role in guiding policy.
Investors will be watching closely for any signs of de-escalation. A prolonged or expanded conflict could further pressure commodity markets, fuel inflation, and impact global trade routes.
As of now, volatility is back, and safe-haven assets may continue to outperform unless tensions cool significantly in the coming days.
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