The US stock market continued to dip into the red as the Dow Jones collapsed by 1,000 points once Wall Street trading opened this morning.
President Donald Trump and Israel’s decision to take direct military action against Iran has spooked investors as oil prices surge globally.
The S&P 500 slipped by around 1.6 per cent, while the Dow Jones and tech-heavy Nasdaq both nosedived by 2.20 per cent as fears grow that the conflict in the Middle East will escalate.
Crude prices are surging once again as key supply routes, including the Strain of Hormuz, remain blocked and Iranian attacks widened out to include Gulf State energy infrastructure.
The Dow Jones has crashed 1,000 points in response to the conflict
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Prices have gone up by more than six per cent as analysts price in a spike in inflation, which is likely to impact potential interest rate cuts from central banks globally.
Before trading opened in New York, David Morrison, senior trade analyst at Trade Nation, said: “This morning’s selloff is a tad deeper than yesterday’s and time will tell if this again turns out to be a ‘buy the dip’ opportunity.
“Tech and small caps have led this morning’s decline with the NASDAQ down 2.5 per cent and the Russell off 2.8 per cent. The Dow was down 1.8 per cent at the time of writing, while the S&P had fallen 2%, and had broken under yesterday’s low of 6,759. Yet still nothing has broken technically to the downside.
“The S&P will need to experience a significant and protracted break below 6,730, not just on the futures, but during the main market session as well, to suggest that the market may have topped.
Experts fear the disruption could trigger massive shockwaves in the global energy markets and the wider economy | GETTY
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Donald Trump has called for a regime change in Iran | GETTY
“Otherwise, the bulls will see another buying opportunity, and one that may eventually take out the high and resistance at 7,000.
“All this is irrespective of how the US-Israeli war against Iran proceeds, although it is adding to uncertainty. It’s probably fair to say that the market consensus is that the bulk of the action will be over by the end of this month.”
Outside of US-Iran war, market analysts are also sounding the alarm over the impact AI will have on the wider economy in the years to come.
Jemma Slingo, pensions and investment expert at Fidelity International, said: “Iran will dominate the headlines this week. However, concerns about artificial intelligence continue to rumble beneath the surface.
Interest rates are not being cut fast enough, according to investors | GETTY
“For many years, technology giants fuelled the US stock market, driving returns and sucking in capital. Change is afoot in the world’s biggest market, however.
“Fears about artificial intelligence are mounting, and software stocks are bearing the brunt of this. Even dazzling results from Nvidia last week failed to halt the software sell-off, and the Nasdaq ended February with its biggest monthly loss since March 2025.
“In these strange times, investors are instead turning to ‘heavy’ sectors like energy, basic materials, and utilities.
“This has been christened the ‘halo’ trade: heavy asset, low obsolescence. Defence and energy stocks are also back in the spotlight.”