Stock futures on Wall Street tumbled while oil prices soared on Friday morning following a wave of Israeli airstrikes on Iran that targeted senior military figures and nuclear facilities, triggering fears of a broader Middle East conflict.
Contracts tied to the Dow Jones Industrial Average fell 453 points, or 1.05%, to 42,863. Futures on the S&P 500 dropped 57.50 points, or 0.95%, to 5,992, while Nasdaq futures declined 273.50 points, or 1.23%, to 21,885.
Oil markets responded to the outbreak of hostilities with a sharp rally.
Brent crude jumped over 7% to $74.28 per barrel, reflecting fears that escalating violence could disrupt supply routes in the oil-rich region.
The selloff came hours after Israel launched a series of strikes on Iranian territory, killing several top officials including Iran’s military chief Mohammad Hossein Bagheri and Revolutionary Guard commander Hossein Salami, according to Iranian state media.
The strikes also reportedly killed two prominent nuclear scientists and hit targets in Tehran, Natanz, Khandab and Khoramabad.
Iran responded by launching around 100 drones toward Israel, according to an Israeli military spokesperson, further fueling anxiety on trading floors.
Israeli Prime Minister Benjamin Netanyahu declared that the operation would continue “for as many days as it takes to remove this threat,” while Defense Minister Israel Katz issued a state of emergency and warned of an imminent missile and drone assault.
Investors sought safety amid the turmoil. US Treasury bonds edged higher, with the 10-year yield ticking up to 4.369%.
The WSJ Dollar Index rose 0.53% to 95.15, reversing a recent slide and indicating renewed demand for the greenback. The Cboe Volatility Index, or VIX, surged above 21, suggesting a spike in investor anxiety.
Gold prices surged to a near two-month high, while auto stocks came under pressure following Trump’s suggestion that steeper import levies could be in the works.
“With this crime, the Zionist regime has brought a bitter and painful fate upon itself, and it will certainly face it,” Iran’s Supreme Leader Ali Khamenei said in a statement, vowing retaliation.
The International Atomic Energy Agency said Friday morning that Iran’s Isfahan nuclear site was unaffected, and there were “no increases in radiation levels” detected at the Natanz site despite reports of strikes nearby.
The broader market mood soured further as European and Asian stocks also fell. Middle Eastern markets were largely closed for Friday prayers, though Israel’s shekel slipped more than 1% against the dollar in limited trading.
The latest escalation comes on the heels of a broader geopolitical standoff between the two nations, which intensified after the October 2023 Hamas terror attacks in Israel.
While Iran has denied direct involvement, it has long backed armed groups like Hamas and Hezbollah.
President Donald Trump was briefed ahead of the Israeli operation, according to Secretary of State Marco Rubio, who said the US did not participate.
Trump reaffirmed the US position Friday, stating, “Certain Iranian hardliners spoke bravely, but they didn’t know what was about to happen. They are all DEAD now, and it will only get worse!”
Trump added, “The United States makes the best and most lethal military equipment anywhere in the World, BY FAR, and that Israel has a lot of it, with much more to come — And they know how to use it.”
With markets rattled, United Nations Secretary-General Antonio Guterres urged both Iran and Israel to show restraint.
“Avoiding a descent into deeper conflict is essential. The region cannot afford another war,” he said in a statement Friday.
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