Major Wall Street indices posted significant losses today as a new surge in oil prices and escalating tensions between the United States and Iran heighten fears of prolonged market turmoil and a new wave of inflation. Specifically, in Tuesday’s session, the Dow Jones dropped 1,000 points or 2.19%. The S&P 500 lost 1.7% and the Nasdaq moved lower by 2.1%, reversing Monday’s spectacular recovery. The small-cap index posted a 2.5% decline, while the VIX volatility index — the so-called “fear index” — surged to 27.30 points, its highest level in three months.
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Wall Street indices performance – Oil and natural gas price surge
The oil price rally remains at the center of attention. Brent crude surpassed $83 per barrel, gaining 7%, following Monday’s 6% jump. West Texas Intermediate also moved 7% higher, above $76. The surge is attributed to Tehran’s threats to strike any vessel attempting to cross the Strait of Hormuz, the maritime passage through which approximately one-fifth of global oil consumption flows. According to Iranian media, a Revolutionary Guards commander declared the passage closed. Meanwhile, production disruptions from Middle Eastern oil and natural gas producers have sent freight costs and prices soaring. Particularly concerning is the sharp increase in European natural gas prices, which have rocketed 70% in two days following the hit to Qatar’s LNG production.
Pressure on airline stocks
The wave of selling is widespread. Airline and travel company stocks, directly exposed to fuel costs, declined significantly for a second day. Delta and Royal Caribbean lost approximately 3.6% and 4.3%, respectively. In the technology sector, Nvidia and Microsoft posted losses, while Broadcom faced stronger pressure.
Geopolitical tensions persist
Geopolitical tensions are intensifying. The US embassy in Riyadh was attacked by drones, while the State Department ordered personnel evacuations from Bahrain, Iraq, and Jordan. Hezbollah, backed by Tehran, launched rocket and drone attacks on Tel Aviv. Meanwhile, concerns are growing about the ability of Gulf states, such as the United Arab Emirates, to intercept attacks. For his part, US President Donald Trump has warned that the conflict could last longer than the four weeks initially projected.
Bond market developments
The energy surge is also affecting the bond market. The yield on the US 10-year Treasury reached a week-high as investors worry that the energy shock will reignite inflation, just as markets are betting on new interest rate cuts from the Federal Reserve. According to LSEG data, expectations for a 25 basis point cut have been pushed back to September from July. Markets await new statements from Fed officials, including John Williams, Jeffrey Schmid, and Neel Kashkari, while critical retail sales and employment data will be released this week.
Stocks bucking the trend
Few stocks are moving against the current. Energy companies and defense industries are posting gains, with Occidental and Cheniere Energy strengthening, while AeroVironment climbed 5%. Conversely, Blackstone declined 5% following reports of $1.7 billion net outflows from its private credit fund in the first quarter.
Gold and investments
Gold is now declining despite the heavy market climate, as dollar strength limited demand for traditional “safe havens.” Mining company stocks like Sibanye Stillwater and Gold Fields posted double-digit losses.
Beyond the geopolitical crisis, investors continue to weigh the impact of artificial intelligence on traditional business models and volatility in the private credit market. MongoDB plunged 27% after disappointing earnings guidance, while Target moved higher as new CEO Michael Fiddelke signaled a return to growth trajectory.
