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Dow plunges 770 points as Israel-Iran tensions escalate, igniting global risk-off sentiment.
Energy and defense stocks gain as investors pivot to war-sensitive sectors.
Crude oil spikes 7%, spotlighting renewed inflation risks amid global uncertainty.
Wall Street faced a sharp sell-off Friday as escalating conflict between Israel and Iran reignited fears of broader regional instability and triggered a flight from risk assets.
The Dow Jones Industrial Average dropped 769.83 points, or 1.79%, closing at 42,197.79. The S&P 500 fell 1.13% to 5,976.97, while the Nasdaq Composite lost 1.30%, ending at 19,406.83. Tech leaders like Nvidia led the retreat, reversing gains from the recent April rebound.
Tensions surged late Thursday after Israel launched airstrikes on Iranian targets, prompting Iran to respond with missile launches Friday. The geopolitical volatility immediately reverberated through global markets, sending energy prices and defense equities higher. ExxonMobil rose 2%, while Lockheed Martin and RTX gained more than 3%.
Crude oil futures spiked more than 7%, with West Texas Intermediate briefly approaching $74 per barrel. Gold also rallied to near two-month highs, underscoring renewed demand for safe-haven assets. The surge in commodities highlights inflationary risks that could challenge central bank narratives in the coming months.
“This conflict adds another layer of instability at a time when the market is already grappling with inflation, interest rates, and slowing growth,” said Siebert Financial CIO Mark Malek. “If oil holds above these levels, inflation data could re-accelerate quickly.”
The conflict has also spilled into U.S. diplomatic efforts, with Iran withdrawing from scheduled nuclear talks. Meanwhile, former President Donald Trump issued sharp warnings on his Truth Social platform, urging Iran to re-enter negotiations or face severe consequences.
Despite strong consumer sentiment data from the University of Michigan—June sentiment rose to 60.5 from 52.2—the week ended with losses across the board: the Dow fell 1.3%, the S&P 500 slipped 0.4%, and the Nasdaq declined 0.6%.
Investors are bracing for further volatility as geopolitical risks take center stage. The next market moves could hinge not only on developments in the Middle East but also on how inflation and Fed policy respond to renewed energy shocks.
