Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., March 2, 2026.
Brendan McDermid | Reuters
U.S. equities tumbled on Tuesday, undoing a Monday equity comeback, as oil prices spiked again and traders began to worry the U.S.-Iran conflict could drag on longer than anticipated.
The Dow Jones Industrial Average lost 1,238 points, or 2.5%. If that holds, it would mark the blue-chip index’s first 1,000-point decline since April 10, 2025. The S&P 500 slipped 2.2%, while the Nasdaq Composite was down 2.3%.
Dow Jones Industrial Average, 2-day
Brent crude oil, the international benchmark, topped $84 a barrel, up 8% Tuesday following a 6% spike Monday. WTI crude jumped 8% to above $77 a barrel after a 6% jump as well on Monday.
Iranian Revolutionary Guard commander said the Strait of Hormuz — the world’s most vital transit route for crude oil — is closed and that Iran would set ablaze ships attempting the route, Reuters reported, citing Iranian media.
There were other signs of the conflict deepening as it enters its fourth day:
- The U.S. embassy in Riyadh, Saudi Arabia’s capital was hit by drones as Iran upped its attacks on the country. The State Department ordered evacuations of personnel from Bahrain, Iraq and Jordan.
- Tehran-backed Hezbollah attacked Tel Aviv with missiles and drones.
- Concerns are growing about how long Gulf states like the UAE can hold off the barrage of Iran missiles and drones with their air defenses.
President Donald Trump has warned that the conflict could continue for more than four weeks.
The jump in energy prices was boosting Treasury yields on fears it may cause inflation to flare back up, just as U.S. investors are banking on more Federal Reserve rate cuts to boost the economy.
Stocks staged a massive comeback on Monday, with the S&P 500 and Nasdaq erasing steep losses to close slightly higher. The Dow also closed well off its session lows. Investors, using the historical playbook on Wall Street around geopolitical conflicts, bought the dip on the notion the conflict would soon be resolved and not impact the economy.
“After initially taking the Middle East war in stride on Monday, market anxiety ratcheted higher overnight amid concerns that a decapitated and leader-less Iranian government and military will execute a prolonged retaliatory response aimed at sowing chaos throughout the region by targeting key economic and energy infrastructure for weeks to come,” said Adam Crisafulli of Vital Knowledge in a note. “While the US and Israeli militaries have complete dominance in the region, they can’t knock out every cheap missile and drone fired off by Iran, especially since interceptor stockpiles are rapidly depleting.”
But energy prices jumped again overnight as the conflict widened. Perhaps more concerning is the surge in European natural gas prices after Iran knocked out Qatar’s LNG production. European natural gas futures have surged more than 70% in two days.
“Energy prices are surging further (especially European gas), placing upward pressure on global borrowing costs,” added Crisafulli.
Tech stocks, which led the Monday intraday comeback, were lower Tuesday. Nvidia and Broadcom lost around 2% each. U.S. memory stocks were also under pressure and were poised to follow the notable declines seen in memory chip stocks in South Korea. Most of the stocks in the S&P 500 were in the red except for oil and energy stocks.
Additionally, shares of Blackstone fell 7% after the Financial Times reported that its private credit fund saw $1.7 billion in net outflows in the first quarter.
There were little places to hide Tuesday with gold prices also lower after Monday gains. The CBOE Volatility index, Wall Street’s fear gauge, jumped to its highest levels since November.
