Stocks fell sharply on Friday morning after Israel launched a wave of airstrikes on Iran, sending energy prices higher and complicating the situation amid rising geopolitical tensions.
The Dow Jones Industrial Average fell 506 points, or about 1.2%. The S&P 500 index fell about 0.7%, while Nasdaq 100 futures fell 0.8%.
Technology stocks decline, oil and defense stocks rise
Shares of companies like Nvidia and Tesla, which had led the market's recovery from its April lows, fell as investors reduced risk. In contrast, energy and defense stocks rose:
Exxon Mobil rose more than 2%.
Chevron added more than 1%
Lockheed Martin jumped about 3%.
Israel declares special state of emergency, oil prices rise
The market decline coincided with Israeli Defense Minister Yoav Gallant declaring a special state of emergency following the Israeli attack on Iran. NBC News quoted two US officials as confirming that there was no US involvement or support in these attacks.
Brent and West Texas Intermediate crude futures rose more than 8%, with WTI approaching $74 per barrel.
Markets move towards safe havens
Along with the rise in energy prices, markets saw inflows into safe havens: the US dollar rose and gold prices rose by more than 1%.
“The expected market reaction (oil rising versus stocks falling) has emerged, but the overall mood in markets this morning remains relatively calm, due to the severe weakness of Iran’s military capabilities, which limits Tehran’s ability to respond forcefully, along with the recent production increases from OPEC+,” Adam Crisafulli of Vital Knowledge wrote in an analyst note.
Trump warns Iran: "Make a deal before it's too late"
In a post on his Truth Social platform Friday morning, US President Donald Trump issued a warning to Iran, calling on it to return to the negotiating table:
"So much death and destruction has occurred, but there is still time to end this massacre. The next attacks will be even more brutal. Iran must make a deal before it's too late and save what's left of the Iranian Empire. No more death, no more destruction. Just do it!"
In a separate post, Trump said he was giving Iran a "second chance" to reach a nuclear agreement: "Two months ago, I gave Iran 60 days to make a deal. They had to do it! Today is day 61."
The market was poised for weekly gains before Friday's drop.
Markets were heading for weekly gains before Friday's sharp decline. As of today's opening session, the S&P 500 was up about 0.8% for the week, less than 2% away from hitting a record high.