U.S. stocks plummeted and oil prices soared on Monday as the United States and Israel launched military strikes on Iran and then launched counterattacks, sending shockwaves to global markets.
The Dow Jones Industrial Average (^DJI) fell 1.1%, or just over 500 points. Meanwhile, the S&P 500 (^GSPC) fell about 1%, while the tech-heavy Nasdaq Composite (^IXIC) fell about 1.1% as escalating conflict in the Middle East prompted a retreat from risk assets.
For investors already nervous about the stock market backdrop, the impact on oil prices and even inflation is top of mind. The S&P 500 (^GSPC) ended February in negative territory as another wave of volatility in artificial intelligence and software names roiled the market.
Oil prices rose on Monday, with Brent crude futures (BZ=F) surging 13% to above $82 a barrel, but gains slowed to fall below $80 at last check. West Texas Intermediate crude futures (CL=F) were trading just under $73, up about 8%. Although Iran is OPEC’s fourth-largest oil producer, markets are also bracing for continued disruption in the crucial Strait of Hormuz, where tanker traffic has come to a standstill.
Shares of energy giant Exxon Mobil (XOM) are rising in pre-market trading. And defense stocks including Lockheed Martin (LMT) have also found buyers. But travel-related stocks fell, with Delta Air Lines (DAL) down nearly 6%.
Elsewhere in the market, gold (GC=F) jumped above $5,400 an ounce despite gains in the dollar (DX-Y.NYB) as JPMorgan said it expected the precious metal’s “risk premium” to rise as much as 10%. Treasury yields (^TNX) moved higher as markets trimmed bets on rate cuts on the prospect of higher inflation.
The next key input into interest rate calculations will be released on Friday with the release of the monthly jobs report. Economists expect U.S. jobs to have been added by 60,000 jobs in February, down from a stronger-than-expected 130,000 job gain in January, easing fears of a recession.
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