Wall Street stocks opened moderately lower on Monday as the war triggered by United States and Israel attacks on Iran spread across the Middle East, sending oil prices higher.
About 20 minutes into trading, the Dow Jones Industrial Average fell 0.7 percent to 48,661.35. The broad S&P 500 declined 0.5 percent to 6,845.44, while the tech heavy Nasdaq Composite Index dropped 0.4 percent to 22,575.52.
The Israeli military announced a new broad strike on Tehran, while Gulf monarchies threatened retaliation and oil tankers were attacked off Oman. Oil prices surged roughly eight percent in early trading.
“If oil prices stay high, that means inflation could go higher,” said Adam Sarhan, warning that elevated energy costs could delay or end potential Federal Reserve interest rate cuts. He added that extended turmoil in the Middle East would be negative for global markets.
Despite the conflict, Patrick O’Hare of Briefing.com said the stock market reaction has been relatively muted, noting that participants are not yet convinced the military action will severely disrupt the global economy.
Sector movements reflected the conflict, with airline and travel stocks retreating, while shares of defense contractors and petroleum producers gained as investors adjusted to rising energy prices and geopolitical risks.
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