Israel launched airstrikes on Iran Friday, causing global oil prices to surge and stocks to tumble. The Dow fell 769.83 points, or 1.79%, ending at 42,197.79. The S&P 500 dropped 1.13% to close at 5,976.97, while the Nasdaq lost 1.30% and settled at 19,406.83.
Oil and defense stocks rose amid the escalating conflict, with oil prices surging over 7%. WTI crude oil neared $74 a barrel at one point. Gold prices also climbed, driven by demand for safe assets.
“This conflict adds challenges to the already sizable collection of worries being maintained by the markets. A spike in crude will have an almost immediate impact on inflation numbers,” said Mark Malek, chief investment officer of Siebert Financial. Former President Donald Trump urged Iran to return to the negotiating table in a post on his social media site Truth Social.
“There has already been great death and destruction, but there is still time to make this slaughter come to an end,” he wrote. A University of Michigan survey indicated that consumer sentiment improved substantially in June, rising to 60.5, well ahead of the expected 54 and marking a 15.9% increase from a month ago. Friday’s sell-off dragged the major averages into negative territory for the week.
The S&P 500 lost 0.4%, while the Nasdaq slid 0.6%. The Dow fell 1.3% over the week. The Israel Defense Forces reported that Iran launched retaliatory strikes on Friday, with some missiles targeting Tel Aviv.
Global oil prices surge
It is unclear if the missiles hit their targets or were intercepted. Travel stocks took a hit as Israel’s attack on Iran raised concerns about the outlook for international travel.
Hotel, cruise, and airline stocks all slid as investors worried that rising oil prices would weigh on profits. Investments tied to gold climbed as investors sought safe assets following Israel’s strike on Iran. Gold futures hit their highest level since April and rose 1.3%.
Shares of payments stocks dropped following a Wall Street Journal report on stablecoin developments by major retailers such as Walmart and Amazon. Credit card issuers and other payments companies saw declines. Airline stocks stumbled as oil prices spiked, increasing fears of rising fuel costs.
These were compounded by the repercussions from Thursday’s Air India Flight 171 crash. Despite the broad sell-off, shares of Palantir rose about 1% on Friday. The company is seen as a key player for U.S. and Israeli defense, providing data analytics and intelligence platforms.
Palantir’s stock is up more than 80% this year. The price of Bitcoin fell to $103,000 on Friday after Israel’s airstrikes on Iran. The increased oil prices jolted inflation expectations, impacting risk assets like cryptocurrency.
Consumers appeared less pessimistic in June, as indicated by the University of Michigan Survey of Consumers. The sentiment index rose significantly, reflecting reduced concerns about the economy and inflation surges.
