NEW YORK, March 2, 2026, 06:56 (EST)
- U.S. stock index futures fell more than 1% as markets priced in a longer Middle East conflict and a fresh oil shock.
- Defense shares rose in premarket trading, while airlines, banks and cruise operators dropped.
- Investors leaned into the dollar and gold as the Strait of Hormuz disruption sharpened inflation worries.
U.S. stock index futures slid on Monday as oil surged after weekend U.S.-Israeli strikes on Iran and Tehran’s retaliation pushed investors back into a risk-off trade.
At 5:42 a.m. ET, Dow E-minis were down 508 points, or 1.04%, while S&P 500 E-minis fell 0.97% and Nasdaq 100 E-minis dropped 1.36%. Wall Street’s fear gauge, the CBOE Volatility Index, jumped to a three-month high of 23.2. “There is plenty of scope for more downside,” IG’s Chris Beauchamp said, while Wells Fargo strategist Ohsung Kwon warned the S&P 500 could sink to 6,000 if crude tops $100 in a worst-case scenario. 1
The timing stings. Markets were already digesting a hot U.S. inflation reading and a choppy run in tech and credit, and the crude spike has revived the inflation problem just as traders were looking for clearer signs of rate cuts. Reuters’ Morning Bid column said markets were no longer fully pricing in another Federal Reserve cut until September. 2
Oil’s jump is the transmission mechanism. Brent crude futures rose as much as 13% to $82.37 a barrel before paring gains, after strikes and counter-strikes disrupted shipping in the Strait of Hormuz — a key chokepoint for roughly one-fifth of global oil and liquefied natural gas flows. Saudi Arabia shut its biggest domestic refinery after a drone strike, and Reuters reported at least three tankers were damaged and about 150 ships were stranded around the strait. “This reflects uncertainty around the scale and duration” of the conflict, Shore Capital’s James Hosie said. 3
Over the weekend, some analysts said prices could move higher still if the strait stays shut. “The key factor here is the closing of the Strait of Hormuz,” ICIS director Ajay Parmar said, adding that prices could open “much closer to $100” if outages drag on. Rystad economist Jorge Leon put the potential supply hit at 8 million to 10 million barrels per day even after diversion routes, while OPEC+ — the OPEC group plus allies including Russia — agreed a modest 206,000 bpd output rise from April. 4
Premarket trading on Wall Street quickly sorted winners from losers. Defense names such as Lockheed Martin and RTX rose about 7%, while Delta and United Airlines fell about 6% each and big banks including Bank of America and Citigroup slid more than 2%. Oil producers gained, while cruise stocks dropped as fuel costs and travel disruptions crept into forecasts.
The same pattern showed up in Europe, where investors dumped banks and travel names and bought energy, defense and shipping. The STOXX 600 fell 1.5% to a two-week low, Lufthansa dropped as much as 11%, and UK lenders slid 4% to 5%, while Shell, BP and TotalEnergies rose and defense firms including BAE Systems and Rheinmetall advanced. “The coordinated attacks … are explicitly aimed at regime change,” Generali Investments economist Paolo Zanghieri said, arguing the conflict could last longer than last year’s brief flare-up. 5
In currencies and rates, investors also treated the conflict as both a safety bid and an inflation shock. Commerzbank chief economist Joerg Kraemer called the market response “relatively moderate” given Hormuz was “effectively closed,” but he said traders still appeared to be expecting a war lasting only weeks. Barclays analysts cautioned that investors may be “underpricing” the risk of a failure to contain the conflict. 6
Gold drew fresh demand ahead of the week’s open. “Gold is expected to assume its mantle as the safe haven asset of choice,” KCM Trade analyst Tim Waterer said, while City Index and Forex.com analyst Fawad Razaqzada said haven buying could push prices back toward $5,500 an ounce and possibly above January’s peak near $5,600. 7
The airline trade wasn’t just about sentiment. Reuters reported thousands of flights were affected across the Middle East as major hubs including Dubai and Doha shut or severely restricted operations, with Cirium estimating about 4,000 flights were due to land in the region on Sunday. “It’s the sheer volume of people and the complexity,” aviation analyst John Strickland said. 8
But the next move depends on the same thing that pushed prices up: how long the disruption lasts and whether fighting spreads to more oil and gas infrastructure. A fast reopening of airspace and shipping lanes could unwind some of Monday’s haven rush; a longer shutdown would keep inflation fears in play and pressure risk assets.
For now, traders are watching crude, shipping and headlines, with U.S. manufacturing surveys due later on Monday and Friday’s payrolls report looming as the next test of how much economic shock markets can absorb.
