Traders work on the floor of the New York Stock Exchange (NYSE) on February 27, 2026 in New York City, USA.
Brendan McDiarmid | Reuters
Stock futures fell on Monday morning after the U.S. and Israel attacked Iran over the weekend, sending oil prices soaring and adding a volatile Middle East to the list of concerns for stock investors.
Dow Jones Industrial Average futures fell 375 points, or 0.77%. S&P 500 futures fell 0.74% and Nasdaq 100 futures fell 0.85%. Gold futures rose 1.6% as investors flocked to the global safe-haven asset.
The joint US-Israeli attack killed Supreme Leader Ayatollah Khamenei and marked a turning point for the Islamic Republic, one of its most significant since 1979. President Donald Trump told CNBC’s Joe Kernen that U.S. military operations in Iran are “ahead of schedule,” but despite those comments, investors are concerned about a protracted conflict.
The major attack was launched Saturday night after Iran rejected U.S. demands to curb its nuclear program. Iranian officials have vowed strong retaliation, raising concerns that the conflict could spread across the region.
“While the tail risk of a continuing conflict is higher than in 2024 or 2025, we do not believe this war will escalate enough to materially change the outlook for the United States,” Barclays’ Ajay Rajadhyaksha said in a note. But earlier this week was “too early to buy on the edge, especially for investors accustomed to a pattern of rapid easing.”
U.S. oil prices rose 8% in early trading as investors worried the conflict could escalate into a wider war that disrupts supplies. Iran is OPEC’s fourth largest oil producer, but uncertainty remains over who will ultimately rule the country amid a leadership vacuum.
The fate of the oil market may depend on whether the fighting disrupts traffic in the Strait of Hormuz, the world’s most important chokepoint for oil distribution. If the disruption continues, it could spill over into global energy markets and reignite inflationary pressures.
“Rising uncertainty could dampen investor sentiment and put widespread pressure on risk assets around the world,” said Adam Hetz, global head of multi-asset at Janus Henderson. “Amid prolonged uncertainty, rising oil prices could spark global inflation fears.”
Geopolitical escalation is exacerbating an already fragile backdrop for stocks. The S&P 500 sold off on Friday amid renewed turmoil in artificial intelligence and software stocks, ending February in the red as investors questioned whether the rapid adoption of AI could displace traditional software providers.
Concerns that automation could erode business models and cause more layoffs weighed on sentiment, raising concerns about ripple effects on the wider economy.
“Overall, we estimate there will be a near-term impact, but we cannot rule out the possibility of longer-term equity tensions,” equity strategists at Citi wrote in a note to clients regarding the Iran impact. “We also need to manage this new episode of volatility alongside growing concerns. This means that while the AI spending boom looks set to continue, the promise of productivity will soon be met with AI-induced business model disruption.”
