Dow drops 1,100 points as Wall Street worries about an extended conflict with Iran

Global Markets Plunge Amid Escalating Middle East Tensions

Traders are seen working on the floor of the New York Stock Exchange on March 2, 2026. (Brendan McDermid/Reuters)

International stock markets experienced significant turbulence for a second consecutive day on Tuesday, as investors grew increasingly anxious about the potential for the Middle East conflict to intensify further.

Sharp Declines Across Major Indexes

• The Dow Jones Industrial Average plummeted 1,140 points, a drop of 2.33%, shortly after opening.
• The S&P 500 and Nasdaq both fell by 2.1%.
• The VIX, Wall Street’s volatility index, soared 22%, reaching its highest point in three months.

Global Sell-Off Continues

• European and Asian stocks extended their losses for a second day.
• Europe’s Stoxx 600 index dropped 3.2%.
• Japan’s Nikkei 225 slid 3.06%.
• South Korea’s Kospi tumbled 7.24%, marking its steepest decline since April. (Markets in South Korea were closed Monday for a holiday.)

Military Escalation and Geopolitical Risks

President Donald Trump stated in a letter to Senator Chuck Grassley that it is currently impossible to determine the full extent or duration of military actions that may be required. The region saw a fourth straight day of intensified military activity, with Israel announcing “simultaneous strikes in Tehran and Beirut” against Iranian military targets and Hezbollah. According to sources, US embassies in Saudi Arabia and Kuwait were struck amid Iranian attacks. Non-essential US government staff in Jordan, Bahrain, Iraq, Qatar, Kuwait, and the United Arab Emirates have been ordered to leave due to safety concerns.

Oil Prices Surge as Shipping Risks Rise

Investors are preparing for further increases in oil prices after Iran announced it would target any vessel attempting to pass through the Strait of Hormuz—a crucial waterway for nearly 20% of the world’s oil supply. With ongoing conflict, many shipping companies and insurers are avoiding the route.

• US crude oil prices jumped 8% on Tuesday to $76.91 per barrel, following a 6.3% increase on Monday. Gasoline prices rose 11 cents to $3.11 per gallon.
• Brent crude, the global benchmark, climbed 7.6% to $83.65 per barrel, its highest since July 2024.

Mixed Performance in Safe Haven Assets

Safe haven investments showed varied results. The yield on 10-year US Treasury bonds rose as investors sold off bonds and considered the inflationary effects of higher oil prices.

US Dollar Strengthens

The US dollar index advanced 0.98%, fueled by expectations that persistent inflation could postpone Federal Reserve interest rate cuts. The index has gained nearly 1.8% this week.

“The fear that the ongoing conflict could drive inflation higher is unsettling traders today,” noted Thierry Wizman, global FX and rates strategist at Macquarie Group.

“Expectations of a brief conflict have been shaken, as US officials suggest the war could last longer than just a few weeks,” Wizman added.

Commodities and Energy Markets React

• Gold prices fell 5%, reversing Monday’s 1.2% gain that had pushed the precious metal to a one-month high.
• European natural gas futures soared 24% on Tuesday after a 38% surge the previous day. US natural gas futures rose 6.3% after a 3.5% increase Monday.
• In the US, diesel futures led energy gains, jumping 13% Tuesday after nearly 12% growth on Monday.

This is a developing story and will be updated as new information becomes available.