Iran Conflict Sparks Sharp Declines in Stocks, Bonds, and Gold
Markets in New York slid sharply as conflict-related fears roiled investors. Stocks and bonds fell while oil climbed and gold posted its worst weekly drop in decades.
Equity moves
The Dow tumbled 444 points, a 0.96% decline. The S&P 500 lost 1.51% and the Nasdaq fell 2.01% on Friday.
The Russell 2000 dropped 2.7% and was headed into correction territory. A correction occurs when an index falls 10% or more from its recent peak.
The Nasdaq briefly slipped into correction during trading before trimming losses at the close. It sits about 9.65% below its late-October high.
The Dow is roughly 9.2% below its February 10 peak. The VIX, Wall Street’s fear gauge, jumped 15%.
Bonds and yields
US Treasury yields rose sharply as investors sold bonds. The 10-year Treasury yield climbed to 4.39% on Friday.
That level is the highest since July. Higher yields tend to drag money away from stocks and affect mortgage rates.
Commodities: oil and gold
Brent crude advanced 3.26% to settle at $112.19 per barrel. That was the highest closing price since July 2022.
Gold sank 2% on Friday. Weekly losses exceeded 10%, marking the metal’s worst week since 1983.
What is driving the moves
The Iran conflict has sparked sharp declines across several asset classes. Rising energy prices and geopolitical uncertainty are central causes.
Reports that the Trump administration is preparing for a possible deployment of US troops to Iran pushed stocks lower. The prospect of a prolonged Middle East conflict has traders pricing in higher oil and inflation risks.
Those inflation risks increase the chance central banks will keep interest rates higher for longer. That outlook is weighing on risk assets.
Market outlook
David Laut, chief investment officer at Kerux Financial, said markets remain in negative territory for the year. He warned the market may not yet have found a bottom.
Investors will watch the duration of the conflict and the oil price trajectory closely. These factors will shape the path for stocks, bonds and gold in coming weeks.
