Dow drops over 1,000 points as Iran crisis escalates outside the Middle East

US Stock Markets Slide Amid Rising Oil Prices and Geopolitical Tensions

Ryan Falvey is pictured on the trading floor of the New York Stock Exchange in New York, March 5, 2026. (Photo: Seth Wenig/AP)

On Thursday afternoon, US equities continued to decline as ongoing worries about an extended conflict involving Iran drove oil prices even higher.

• The Dow Jones Industrial Average plunged by 1,013 points, marking a 2.08% drop.
• The S&P 500 lost 1.28%.
• The Nasdaq, known for its technology stocks, slipped by 1.16%.

Oil prices soared to levels not seen since the middle of 2024. US crude oil surged 8.2% to reach $80.78 per barrel, while Brent crude, the global standard, advanced 5.2% to $85.63 per barrel.

Futures for US natural gas and diesel also climbed, rising 2.6% and 10% respectively. The spike in energy costs could fuel inflation, making the Federal Reserve’s job more challenging and putting additional strain on the stock market.

“There is still significant uncertainty regarding how long the conflict might last and the extent to which it could disrupt global energy supplies,” noted Lee Hardman, a senior currency economist at MUFG.

European markets mirrored the downturn, with the Stoxx 600 index dropping 1.29% and Germany’s DAX index falling by 1.61%.

The US dollar gained ground against other leading currencies, as investors sought safer assets. The dollar index has risen 1.7% so far this week.

Yields on US Treasury bonds increased as investors sold off bonds and considered the inflationary risks posed by higher oil prices. The yield on the 10-year Treasury note reached 4.14%, its highest point in three weeks.

Market volatility spiked, with the VIX—often called Wall Street’s “fear gauge”—jumping 18%. Anxiety was the dominant mood in the markets.

“There are still no indications that tensions are easing, and oil prices keep climbing,” commented Jim Reid, Deutsche Bank’s global head of macro research.

This situation is still unfolding and updates will follow as more information becomes available.