Wall Street futures slide as Middle East conflict expected to drag on

2026-03-02 - 11:54

Nasdaq 100 E-minis were down 340.25 points, or 1.36%. (EPA Images pic) NEW YORK: US stock index futures fell over 1% today, with investors increasingly pricing in the prospect that the conflict in the Middle East could persist for weeks, potentially disrupting global trade flows and adding to inflationary pressures. Sectors that were hit the most in premarket trading included airlines, as several carriers halted flights, while disrupted shipping through the crucial Strait of Hormuz pushed crude prices up 8%. That painted an overall cloudy outlook for the global economy and also weighed on financial stocks. Delta and United Airlines tumbled 6% each in premarket trading. Big banks such as Bank of America and Citigroup slid over 2% each. Investors instead flocked to traditional safe havens such as the US dollar. Higher precious metals prices helped miners such as Gold Fields and Barrick Mining add 2% each. Defense stocks also got a boost, with Lockheed Martin and RTX gaining 7% each, while Kratos rose 10% and AeroVironment was up 13%. After coordinated US and Israeli strikes on Iran over the weekend killed Tehran’s Supreme Leader, Israel launched retaliatory attacks following air strikes by Iran and Hezbollah militants in Lebanon, deepening fears that the conflict could widen further across the region. US President Donald Trump also said the conflict could stretch on for another four weeks, according to a report. “With Trump saying the campaign could run for four weeks, there is plenty of scope for more downside should the conflict widen to encompass oil and gas infrastructure,” said Chris Beauchamp, chief market analyst at online trading and investing platform IG. At 5.42am, Dow E-minis were down 508 points, or 1.04% and S&P 500 E-minis were down 67 points, or 0.97%. Nasdaq 100 E-minis were down 340.25 points, or 1.36%. Wall Street’s fear gauge, the CBOE VIX index, jumped 3.3 points to a three-month high of 23.2. Markets were already in a state of uncertainty over AI-disruption worries, jitters in the private credit space and a muddied trade outlook that led to the S&P 500 and the Nasdaq posting their steepest monthly drops since March 2025 on Friday. A prolonged spike in oil prices would add to inflationary pressures at a time when data shows US tariffs are already pushing prices higher. Those concerns lifted Treasury yields from early declines, and investors raised their bets on the Federal Reserve staying put on interest rates in June. Wells Fargo’s chief equity strategist, Ohsung Kwon, said that the benchmark S&P 500 could fall to 6,000 points, nearly 13% from the last close, if crude prices hit over US$100/barrel in a worst-case scenario. Earnings could also be hit by about 1.3% in an oil‐driven stagflation shock. Oil companies Occidental Petroleum and ConocoPhillips added over 6% each, while crude-price-sensitive cruise stocks Carnival and Royal Caribbean slid 6% each. On the data front, manufacturing PMIs for last month are due later in the day and the focus will shift to a key non-farm payrolls report later in the week.