Dow plunges 1,200 points as investors fret over Iran war
Stocks in the U.S. plummeted after the opening bell on Tuesday, as jittery investors reacted to the potential fallout from the war in Iran, including the impact on global oil supplies.
The Dow Jones Industrial Average slid 1,235 points, or 2.5%, to 47,670 in early trading, while the S&P 500 and the tech-heavy Nasdaq Composite dropped 2.2% and 2.4%, respectively.
“Global financial markets are in disarray, anticipating a significant interruption in supplies of crude oil and natural gas because of President Trump’s war against Iran,” Carl Weinberg, chief economist at investment advisory firm High Frequency Economics, said in a note to clients. “The conflict is spreading, and confidence in the continuity of energy supplies is declining in parallel.”
Questions about how the war in Iran will impact energy markets and how long the conflict will last weighed heavily on investor sentiment as markets opened Tuesday, according to Bret Kenwell, an investment analyst at eToro. The weak start on Wall Street follows a turbulent trading day yesterday, which ended with a slight market rebound.
“Markets did a decent job shaking off Monday morning’s volatility, but the task gets harder today, with the S&P 500 hitting a fresh 2026 low,” he told CBS News. “Markets hate uncertainty, and as uncertainty deepens in the Middle East, investors are getting jittery.”
Mounting economic risks
Wall Street is grappling with questions over the world’s oil supply as tanker traffic in the Strait of Hormuz bogs down. Roughly 20% of the world’s oil supply flows through the waterway, which connects the Persian Gulf to the Gulf of Oman and the Arabian Sea.
Brent crude, the international standard, climbed $4.72, or 6.2%, to $80.83 per barrel. Benchmark U.S. crude rose $6.22, or 8.8%, to $77.45 a barrel, according to FactSet.
The 10-year Treasury yield climbed to 4.10%, up from 4.05% late Monday, a sign that investors are bracing for inflation amid potential oil supply constraints. A lasting rise in oil prices to between $90 and $100 per barrel could further ramp up U.S. inflationary pressures, according to investment advisory firm Capital Economics.
Rising Treasury yields also could influence fixed-mortgage rates, which tend to move in the same direction as the bond market. That would be an unwelcome development for the housing market, which just saw 30-year fixed mortgage rates dip below 6% for the first time since 2022.
Faced with a reduction in Iranian oil exports, eight countries that are part of the OPEC+ oil cartel announced Sunday they would boost production of crude. Those countries include Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman.
But EY-Parthenon chief economist Gregory Daco noted that the additional oil supply, which amounts to 206,000 barrels per day, will be modest relative to the volume of crude that passes through the Strait of Hormuz.
“It would be insufficient to neutralize the effects of a meaningful or sustained disruption,” he said in an email.
