Major Wall Street stock indices slumped sharply on Monday as investors braced for a protracted Middle East conflict. The downturn follows joint US-Israeli strikes on Iran that resulted in the death of its Supreme Leader, triggering a geopolitical crisis.
In retaliation, Tehran launched a barrage of missiles targeting Israel and American bases throughout the Gulf. This escalation threatens to paralyze global trade routes and reignite stifling inflationary pressures.
At 09:52 a.m. ET, the Dow Jones Industrial Average fell 355.68 points, or 0.73%, to 48,622.24, the S&P 500 lost 40.14 points, or 0.58%, to 6,838.74 and the Nasdaq Composite lost 139.42 points, or 0.61%, to 22,528.79.
At the opening bell, the Dow Jones Industrial Average fell 183.5 points, or 0.37%, to 48,794.42. The S&P 500 fell 54.5 points, or 0.79%, to 6,824.36, while the Nasdaq Composite dropped 346.1 points, or 1.53%, to 22,322.119.
Seeking stability amid the chaos, investors have pivoted toward traditional safe-haven assets, fueling a surge in gold, US Treasuries, and the dollar as the global economic outlook darkens.
While airline and travel stocks plunged amid widespread airspace closures, shares in defense contractors and petroleum producers surged sharply.
The Israeli military on Monday said it began a new “broad strike” on Tehran, while Gulf monarchies threatened to retaliate and tankers were attacked off Oman.
Following the West Asia turmoil, crude oil prices climbed over 8%. At around 1430 GMT, Brent North Sea Crude advanced 8.8% at $79.30 per barrel and West Texas Intermediate surged 7.8% at $72.26 per barrel.
According to Bloomberg, uncertainty about oil prices may play a big role in determining broader market sentiment, said Chris Larkin at E*Trade from Morgan Stanley.
“There are more questions than answers right now, but a stabilizing energy picture could have a positive ripple effect, while concerns about a longer-term disruption could have the opposite,” Larkin said.
In the bond market, the yield on the 10-year Treasury rose to 4.01% from 3.97% late on Friday.
The US dollar also appreciated against other major currencies, including the euro and Japanese yen.
Key Stock Movers
United Airlines dropped 5.5%, American Airlines sank 6.7% and Delta Air Lines lost 3.9%.
Norwegian Cruise Line Holdings slipped 11.3%.
Among the energy shares, Exxon Mobil climbed 2.2% and Occidental Petroleum rose 2.3%.
Defense stocks rallied, with Lockheed Martin gaining 4.3%, RTX surged 3.8%, and Kratos Defense & Security Solutions rallied over 11%.
BULLION MARKET
Gold prices marched higher on Monday on safe-haven demand, driven by escalating Middle East tensions.
At 1406 GMT, spot gold gained 2% to $5,384.41 an ounce, after hitting a session high of $5,418.50. US gold futures added 2.9% to $5,397.40 an ounce.
Rising geopolitical tensions have prompted BRIC (Brazil, Russia, India, and China) central banks to cut their exposure to dollar-denominated assets in favour of gold, said analysts.
Among other metals, spot silver fell 0.6% to $93.23 an ounce. Spot platinum declined 1.7% to $2,324.40 while palladium lost 1.1% to $1,767.00.
