Wall Street Slips on Middle East Flare-Up as Futures Hold Steady
CNBC reported Monday that all three major U.S. averages closed lower as escalating Middle East tensions stocks sent investors scrambling for safety, dragging the Dow Jones Industrial Average down 557 points.
Broad Selloff Hits Every Sector but Energy
The blue-chip Dow finished the session 1.13% lower. The S&P 500 shed 0.41%, and the Nasdaq Composite slid 0.19%. Energy was the sole sector to close in positive territory, adding 0.85%. Materials led the declines, falling 1.57%. Industrials, consumer staples, and financials also posted meaningful losses.
Overnight, futures offered little relief or alarm. S&P 500 and Nasdaq 100 futures hovered near the flatline after the closing bell. Dow futures edged up just 14 points. U.S. West Texas Intermediate crude futures slipped roughly 1% in extended trading after rising during the regular session.
Iran Strikes Rattle an Already Fragile Ceasefire
The catalyst was a fresh round of hostilities in the Gulf. The United Arab Emirates announced that Iran had launched drones and missiles against it, shaking confidence in a tentative truce that had already appeared precarious. American forces compounded the tension. Admiral Brad Cooper, commander of U.S. Central Command, said U.S. forces had destroyed six small Iranian vessels in the Strait of Hormuz after they attempted to disrupt commercial shipping lanes. Iranian state media disputed those accounts.
The Strait of Hormuz is a critical artery for global oil exports. Any sustained disruption there typically triggers immediate commodity price moves and broad risk-off sentiment in equity markets.
Analysts Urge Calm Despite the Noise
Not everyone on Wall Street was bearish. Dan Skelly, head of market research and strategy at Morgan Stanley Wealth Management, told CNBC’s Closing Bell: Overtime that investors have grown somewhat accustomed to geopolitical shocks interrupting a broader structural story. He compared the reaction to last April’s Liberation Day selloff, which ultimately reversed quickly. Skelly argued markets now treat flare-ups almost like interruptions rather than pivots, with underlying confidence in artificial intelligence momentum and resilient corporate earnings keeping longer-term sentiment intact.
What Traders Watch Next
Tuesday brings a full slate of potential market movers. Earnings from Pfizer, PayPal, Shopify, HSBC, and DuPont are all due before the opening bell. On the macro side, traders will track the U.S. trade deficit report and the latest Job Openings and Labor Turnover Survey data, both of which could sharpen views on the Federal Reserve’s next steps. After hours Monday, Pinterest surged 15% on strong revenue guidance, while Duolingo dropped around 13% after its monthly active user count missed analyst forecasts.
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