U.S. stocks fell sharply Friday as escalating military conflict between Israel and Iran sent oil prices soaring and investors retreating from risk assets.
The Dow Jones Industrial Average closed down 1.79%, while the S&P 500 closed down 1.13% and the Nasdaq lost 1.30%.
Israel launched strikes on Iran’s nuclear and missile facilities late Thursday evening, prompting retaliatory missile launches from Iran during the final hours of Friday’s U.S. trading session.
Oil and defense stocks climbed. Brent crude jumped more than 7%, briefly surging 14% during Asia trading hours, while WTI crude approached $74 a barrel.
ExxonMobil rose around 2%, and defense firms Lockheed Martin and RTX gained about 3% each. Gold rose 1.4% to $3,432 an ounce, nearing its April record.
The sell-off ended what was shaping up to be a positive week for equities.
Global markets followed suit. European and Asian equities posted losses of more than 1%. U.S. Treasury yields rose, with the 10-year note climbing 7.9 basis points to 4.436%, reversing earlier declines on safe-haven demand. The dollar also rebounded, gaining 0.5%.
President Trump urged Iran to return to nuclear talks and warned of further consequences, citing a missed 60-day deadline. Meanwhile, Iran canceled planned negotiations with the U.S.
Economically, the University of Michigan’s consumer sentiment index rose sharply to 60.5 in June, topping forecasts and suggesting resilient consumer outlooks despite geopolitical uncertainty.
Investors now face renewed inflation risks from rising oil prices and uncertainty around future Federal Reserve actions.