Stocks Slip, Oil Prices Jump 7% on Iran-Israel Tensions/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Oil prices soared over 7% after Israel’s attack on Iran raised fears of broader conflict. The S&P 500, Dow, and Nasdaq all dipped as investors reacted to geopolitical uncertainty. Energy stocks rose while travel, tech, and Treasury markets felt pressure from rising oil.
Oil Jumps, Stocks Fall Amid Israel-Iran Tensions: Quick Looks
- Crude spikes 7%: Brent and U.S. crude surge on supply fears.
- Wall Street dips: Dow down 508 points; tech and airlines hit hard.
- Gold climbs: Investors seek safety; gold rises 1.8%.
- Treasury yields rise: Inflation and rate concerns push 10-year to 4.38%.
- Energy stocks rally: Exxon and Lockheed benefit from military concerns.
Stocks Slip, Oil Prices Jump 7% on Iran-Israel Tensions
Deep Look
Oil Soars on Escalation Fears
Crude oil prices surged Friday, jumping over 7% in early trading, after Israel’s unprecedented military strikes against Iranian nuclear and military facilities sparked fears of broader Middle East conflict. U.S. benchmark crude rose 7.1% to $72.88 a barrel, while Brent crude, the international standard, gained 7.2% to $74.32. Investors are bracing for potential disruption to global oil flows if the conflict escalates further.
Iran, a major oil producer, remains under tight sanctions, but a full-scale war could choke the country’s already limited exports. Past clashes between Iran and Israel have caused brief spikes in oil prices that later cooled. However, analysts caution this time may be different if supply routes are disrupted or if Iran targets oil tankers and infrastructure in the Gulf region.
“This is an economic shock that nobody really needs,” said Brian Jacobsen, chief economist at Annex Wealth Management. “But it’s more of a sentiment shock than a fundamental one—for now.”
Wall Street Pulls Back
Markets responded with caution. The S&P 500 dropped 0.7%, the Dow Jones Industrial Average fell 508 points (1.2%), and the Nasdaq composite declined 0.8% in early trading. The pullback came after a strong recent rally that had brought U.S. indexes near record highs.
Stocks most exposed to fuel costs and consumer sentiment led losses. United Airlines dropped 5.2%, Delta Air Lines fell 4.5%, and Norwegian Cruise Line slid 2.9%, as higher oil prices and geopolitical risk weigh on travel demand and operating costs.
Even strong earnings weren’t enough to offset the mood. Adobe shares fell 5.7%, despite beating profit expectations. Analysts noted that while the results were solid, investors hoped for higher revenue guidance amid broader tech optimism.
Energy, Defense Stocks Rally
In contrast, companies that benefit from rising energy prices and global conflict rallied. Exxon Mobil climbed 2.2%, while ConocoPhillips rose 2.3%, thanks to higher oil futures. Lockheed Martin and Northrop Grumman—defense contractors likely to gain from expanded military budgets—also advanced 2.3% each.
Investors turned to gold, a traditional safe-haven asset, which jumped 1.8% to $3,463.70 per ounce. However, Treasury prices fell, lifting the yield on the 10-year note to 4.38% from 4.36%, amid concerns that higher oil could reignite inflation and complicate the Federal Reserve’s path forward on interest rates.
Inflation, Rates, and Tariff Worries
Inflation had been cooling and hovering near the Federal Reserve’s 2% target. But with oil surging and President Donald Trump’s tariffs still shaking global trade dynamics, analysts warn that price pressures could mount again. Higher inflation could limit the Fed’s flexibility to cut interest rates—something investors had been hoping for in the latter half of 2025.
The Fed had paused rate moves this year, waiting to assess the full impact of Trump’s trade and tariff agenda. Renewed inflation could force a more hawkish stance, even as some sectors show signs of slowing under higher borrowing costs.
Global Markets Echo U.S. Concerns
European and Asian markets mirrored U.S. unease. Germany’s DAX dropped 1.4%, while France’s CAC 40 fell 1.1%. Investors across continents are weighing the risk of sustained conflict, potential oil supply shocks, and the broader implications for inflation, monetary policy, and global growth.
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