Israel launched airstrikes on Iran on Friday, causing stocks to tumble and oil prices to surge. 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.
The market drop began Thursday evening as Israel’s Defense Minister Israel Katz declared a special state of emergency following the attack on Iran. Two U.S. officials confirmed that there is no U.S. involvement or assistance in the offensive. On Friday, the market’s decline worsened after the Israel Defense Forces reported that Iran launched retaliatory strikes, aiming at Tel Aviv.
Iranian state television confirmed these actions in response to ongoing conflicts and stated that they had planned for a continuation of nuclear negotiations with the U.S. this weekend. Oil futures surged more than 7%, with WTI crude nearing $74 a barrel. Gold prices also climbed, driven by demand for safe assets.
Markets react to Middle East conflict
“This conflict adds challenges to the already sizable collection of worries being maintained by the markets. At the bare minimum, the spike in crude, if it persists, will have an immediate impact on inflation numbers,” said Mark Malek, chief investment officer of Siebert Financial.
President Donald Trump, in a Friday morning post on his social media site Truth Social, encouraged Iran to negotiate. “There has already been great death and destruction, but there is still time to make this slaughter, with the next planned attacks being even more brutal, come to an end. Iran must make a deal before there is nothing left,” Trump wrote.
In a separate post, he mentioned giving Iran a “second chance” to strike a nuclear deal, noting that a 60-day ultimatum had recently expired. Separately, a closely watched University of Michigan survey released Friday indicated an improvement in consumer sentiment. The university’s Survey of Consumers rose to 60.5 in June, well ahead of the Dow Jones estimate of 54, a 15.9% increase from the previous month.
Friday’s sell-off dragged the major averages into negative territory for the week. The S&P 500 lost 0.4%, the Nasdaq slid 0.6%, and the Dow fell 1.3%.
