Wall Street slides, Dow down by 1.8% as oil prices surge on escalating US–Israel-Iran conflict
US equities fell steeply as oil prices spiked. The Dow Jones Industrial Average dropped as much as 1,033 points in early trade and was last down 902 points, or 1.8%. The S&P 500 declined 1.5%, while the Nasdaq Composite fell 1.8%. At session lows, the S&P 500 was down 1.9% and the Nasdaq had slipped 2%.
- Mar 3, 2026,
- Updated Mar 3, 2026 10:19 PM IST
A sharp divergence between equity markets and energy prices dominated global trading on Tuesday, with Wall Street tumbling as crude oil extended its explosive rally. Investors are increasingly concerned that the widening US–Iran conflict could inflict deeper and more prolonged damage on the global economy than initially anticipated.
US equities fell steeply as oil prices spiked. The Dow Jones Industrial Average dropped as much as 1,033 points in early trade and was last down 902 points, or 1.8%. The S&P 500 declined 1.5%, while the Nasdaq Composite fell 1.8%. At session lows, the S&P 500 was down 1.9% and the Nasdaq had slipped 2%.
The sell-off erased Monday’s late-session rebound, when major indices had recovered from deep losses to close marginally higher. That recovery had been predicated on expectations that geopolitical tensions would remain contained and oil prices would not spike dramatically. Tuesday’s surge in crude challenged that assumption.
Oil prices
Energy markets told a very different story from equities. Brent crude, the global benchmark, surged more than 8% on Tuesday to trade above $84 per barrel, following a 6% gain the previous day. West Texas Intermediate (WTI) crude also climbed over 8% to above $77 per barrel after rising 6% on Monday.
Less than a week ago, Brent was trading near $70 per barrel. The rapid escalation toward the $85 mark has revived fears that prices could approach or even breach $100 if the conflict intensifies.
According to Reuters, citing Iranian media, a commander of Iran’s Islamic Revolutionary Guard Corps claimed that the Strait of Hormuz had been closed and warned that vessels attempting to transit the route would face attack. The strait is one of the world’s most critical oil chokepoints, handling roughly 20% of global crude flows.
Conflict deepens
The confrontation entered its fourth day with mounting regional spillovers. The US embassy in Riyadh was reportedly struck by drones amid increased Iranian-linked attacks on Saudi Arabia. The US State Department ordered evacuations of personnel from Bahrain, Iraq, and Jordan.
Tehran-backed Hezbollah launched missiles and drones toward Tel Aviv, while Gulf states, including the United Arab Emirates, activated air defense systems against incoming threats. President Donald Trump indicated that hostilities could continue for more than four weeks, raising the prospect of sustained market volatility.
Inflation fears
Rising energy prices also reverberated through bond markets. US Treasury yields moved higher as investors reassessed inflation risks, with elevated oil prices potentially complicating expectations for further Federal Reserve rate cuts.
In Europe, natural gas markets reacted even more sharply. European natural gas futures have surged over 70% in two days after Iranian strikes disrupted Qatar’s liquefied natural gas production, tightening global supply.
Within US equities, losses were broad-based. Technology stocks, which had led Monday’s rebound, came under renewed pressure. Nvidia and Broadcom each fell around 2%, while memory chip stocks declined in tandem with weakness in South Korean semiconductor names.
The contrast was stark: while oil markets price in escalating supply risk, Wall Street is grappling with the economic consequences. The tug-of-war between surging energy costs and weakening risk appetite now defines the market narrative.
A sharp divergence between equity markets and energy prices dominated global trading on Tuesday, with Wall Street tumbling as crude oil extended its explosive rally. Investors are increasingly concerned that the widening US–Iran conflict could inflict deeper and more prolonged damage on the global economy than initially anticipated.
US equities fell steeply as oil prices spiked. The Dow Jones Industrial Average dropped as much as 1,033 points in early trade and was last down 902 points, or 1.8%. The S&P 500 declined 1.5%, while the Nasdaq Composite fell 1.8%. At session lows, the S&P 500 was down 1.9% and the Nasdaq had slipped 2%.
The sell-off erased Monday’s late-session rebound, when major indices had recovered from deep losses to close marginally higher. That recovery had been predicated on expectations that geopolitical tensions would remain contained and oil prices would not spike dramatically. Tuesday’s surge in crude challenged that assumption.
Oil prices
Energy markets told a very different story from equities. Brent crude, the global benchmark, surged more than 8% on Tuesday to trade above $84 per barrel, following a 6% gain the previous day. West Texas Intermediate (WTI) crude also climbed over 8% to above $77 per barrel after rising 6% on Monday.
Less than a week ago, Brent was trading near $70 per barrel. The rapid escalation toward the $85 mark has revived fears that prices could approach or even breach $100 if the conflict intensifies.
According to Reuters, citing Iranian media, a commander of Iran’s Islamic Revolutionary Guard Corps claimed that the Strait of Hormuz had been closed and warned that vessels attempting to transit the route would face attack. The strait is one of the world’s most critical oil chokepoints, handling roughly 20% of global crude flows.
Conflict deepens
The confrontation entered its fourth day with mounting regional spillovers. The US embassy in Riyadh was reportedly struck by drones amid increased Iranian-linked attacks on Saudi Arabia. The US State Department ordered evacuations of personnel from Bahrain, Iraq, and Jordan.
Tehran-backed Hezbollah launched missiles and drones toward Tel Aviv, while Gulf states, including the United Arab Emirates, activated air defense systems against incoming threats. President Donald Trump indicated that hostilities could continue for more than four weeks, raising the prospect of sustained market volatility.
Inflation fears
Rising energy prices also reverberated through bond markets. US Treasury yields moved higher as investors reassessed inflation risks, with elevated oil prices potentially complicating expectations for further Federal Reserve rate cuts.
In Europe, natural gas markets reacted even more sharply. European natural gas futures have surged over 70% in two days after Iranian strikes disrupted Qatar’s liquefied natural gas production, tightening global supply.
Within US equities, losses were broad-based. Technology stocks, which had led Monday’s rebound, came under renewed pressure. Nvidia and Broadcom each fell around 2%, while memory chip stocks declined in tandem with weakness in South Korean semiconductor names.
The contrast was stark: while oil markets price in escalating supply risk, Wall Street is grappling with the economic consequences. The tug-of-war between surging energy costs and weakening risk appetite now defines the market narrative.