Global markets were rattled Friday as oil prices surged and stocks tumbled in response to rising geopolitical tensions. Following Israel’s military strikes on Iranian nuclear and military targets, fears mounted over potential disruptions in the global oil supply. The S&P 500 fell 1.1%, erasing its weekly gains, while the Dow Jones Industrial Average plunged 769 points (1.8%), and the Nasdaq dropped 1.3%. These losses reflect investor anxiety over the potential economic fallout from worsening Middle East violence.
Oil Prices Surge Amid Escalation Fears, Travel Stocks Plunge as Markets React Sharply
The oil market reacted sharply, with U.S. crude spiking 7.3% to $72.98 a barrel, and Brent crude jumping 7% to $74.23. Iran, a major oil producer, faces Western sanctions, yet any broader conflict could further restrict its exports. Additionally, fears grew around possible disruptions in the Strait of Hormuz, a critical chokepoint for global oil shipments.
Past instances of Iran-Israel conflict have caused brief oil price spikes, often stabilizing when supply was unaffected, but this time, the risk of escalation appears higher.
Global Markets Slide as Israel-Iran Conflict Fuels Oil Surge, Travel Stocks and Tech TumbleMarket jitters hit companies reliant on travel and fuel, as consumer confidence and oil-dependent costs became central concerns. Shares of Carnival, United Airlines, and Norwegian Cruise Line each plunged between 4.4% and 5%. The broader equity selloff was significant, though not among the year’s steepest.
Meanwhile, oil producers like Exxon Mobil and ConocoPhillips gained over 2%, as rising crude prices hinted at better margins. Defense contractors like Lockheed Martin and Northrop Grumman also saw over 3% gains amid expectations of increased military spending.
Safe-Haven Assets Mixed as Inflation Fears and Global Tensions Rattle Investor Confidence
As geopolitical tensions rose, investors moved toward traditionally safer assets like gold, which climbed 1.4%. Surprisingly, U.S. Treasury bonds did not follow suit—prices fell, pushing yields higher. The 10-year Treasury yield rose to 4.41% from 4.36%, reflecting investor concerns that surging oil prices might fuel inflation.
This inflation worry is significant given the Federal Reserve’s ongoing focus on keeping inflation near its 2% target, especially with additional economic uncertainty stemming from U.S. trade policies.
The broader economic sentiment turned more cautious, despite a positive consumer sentiment report from the University of Michigan showing a rebound due to paused tariffs. Wall Street closed sharply lower, with Adobe falling 5.3% despite beating earnings expectations, as investors seemed underwhelmed by its future revenue outlook.
Global markets mirrored this downturn, with European indexes like France’s CAC 40 and Germany’s DAX losing around 1%. Investors remain wary of both geopolitical risks and economic headwinds that could strain global recovery.
