NEW YORK, March 2, 2026, 06:56 (EST)
- Futures tracking major U.S. stock indexes slid over 1%, dragged lower as traders braced for an extended Middle East conflict and another jolt in oil prices.
- Defense stocks climbed ahead of the open; airlines, banks, and cruise lines slipped.
- The Strait of Hormuz disruption put inflation nerves on edge, sending investors toward the dollar and gold.
U.S. stock index futures fell Monday, with oil prices jumping after U.S.-Israeli strikes hit Iran over the weekend. Tehran fired back, prompting investors to retreat to safety.
Dow E-minis slid 508 points, or 1.04%, as of 5:42 a.m. ET. S&P 500 E-minis lost 0.97%, with Nasdaq 100 E-minis down 1.36%. The CBOE Volatility Index shot up to 23.2, its highest mark in three months. “There is plenty of scope for more downside,” IG’s Chris Beauchamp commented. Over at Wells Fargo, strategist Ohsung Kwon sees the S&P 500 possibly dropping to 6,000 if crude prices break above $100 in a worst-case scenario. 1
This lands at a tricky moment. Investors had been wrestling with stubborn U.S. inflation and volatility in both tech and credit. Now, with crude surging, inflation worries are right back on the table—just as traders hoped for a clearer path to rate cuts. According to Reuters’ Morning Bid, markets have stopped fully pricing in another Fed cut until September. 2
Brent crude surged up to 13%, touching $82.37 a barrel before trimming gains. The movement came fast after shipping was rocked by fresh strikes and retaliation in the Strait of Hormuz—a corridor handling about a fifth of global oil and LNG traffic. Saudi Arabia responded by shutting down its largest domestic refinery following a drone attack. Around the same time, Reuters counted at least three tankers damaged and roughly 150 vessels stuck near the strait. “This reflects uncertainty around the scale and duration” of the conflict, said Shore Capital’s James Hosie. 3
Some analysts warned over the weekend that prices might climb further if the strait remains closed. “The key factor here is the closing of the Strait of Hormuz,” said Ajay Parmar, director at ICIS. He noted prices could open “much closer to $100” should the outages persist. Jorge Leon, economist at Rystad, estimated a supply shock of 8 million to 10 million barrels per day, even factoring in alternative routes. OPEC+—the expanded OPEC group including Russia—signed off on a 206,000 bpd output increase starting April. 4
Wall Street’s early moves drew a sharp line between sectors. Lockheed Martin and RTX tacked on nearly 7%, leading defense. Delta and United Airlines took a hit, off around 6% apiece, and Bank of America and Citigroup lost over 2%. Oil producers caught a bid. Cruise stocks, pressured by rising fuel prices and worries about travel snags, slid into the red.
Europe followed a similar script, with traders unloading banks and travel stocks, snapping up energy, defense, and shipping instead. The STOXX 600 slipped 1.5%, hitting its lowest level in two weeks. Lufthansa tumbled up to 11%. UK banks were battered, off 4% to 5%. Oil majors Shell, BP, and TotalEnergies saw gains, and defense players like BAE Systems and Rheinmetall pushed higher. “The coordinated attacks … are explicitly aimed at regime change,” said Paolo Zanghieri, economist at Generali Investments, suggesting this conflict could drag on far longer than last year’s short-lived escalation. 5
Currencies and rates reflected a dual response from investors—seeking safety while bracing for an inflation jolt. Commerzbank’s Joerg Kraemer described the reaction as “relatively moderate,” despite the fact that Hormuz was “effectively closed.” Kraemer noted, though, that markets seemed to be betting the war would last just weeks. Barclays analysts flagged a concern: investors might be “underpricing” the danger that the conflict can’t be contained. 6
Gold picked up new buyers before the week kicked off. “Gold is expected to assume its mantle as the safe haven asset of choice,” KCM Trade analyst Tim Waterer said. City Index and Forex.com analyst Fawad Razaqzada pointed to haven demand as a possible driver back toward $5,500 an ounce, maybe even surpassing January’s high close to $5,600. 7
The airline trade ran into more than just nerves. Reuters flagged that thousands of flights got tangled across the Middle East, with major airports like Dubai and Doha either closed or running on tight restrictions. Cirium put the scheduled arrivals for Sunday at around 4,000. “It’s the sheer volume of people and the complexity,” said aviation analyst John Strickland. 8
Everything now hinges on what drove prices higher in the first place: the duration of the disruption, and whether the conflict spills over into more oil and gas facilities. If airspace and shipping routes reopen quickly, some of Monday’s rush into safe-havens might reverse. A drawn-out closure, though, would keep inflation worries on the table, weighing on risk assets.
Crude, shipping, and the latest headlines have traders’ attention right now. U.S. manufacturing surveys are on deck later this Monday, while Friday’s payrolls numbers still hang over the market as the next gauge of just how much economic turbulence investors can take.
