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A global stock sell-off is coming Wall Street Tuesday, and oil prices are jumping even higher as concerns grow that war with Iran is spreading and may cause more damage to the global economy than feared.
The S&P 500 fell two percent in morning trading. The Dow Jones Industrial Average was down 1,048 points, or 2.1 percent, at 10 a.m. ET, and the Nasdaq composite was 2.1 percent lower.
Just one day ago, US stocks opened with sharp losses, only to recover and end the day with mild gains.
But that was with the caveat that oil prices didn’t jump too high, like more than $100 a barrel.
On Tuesday, oil prices approached that limit and caused even more alarm. The price of a barrel of Brent crude, the international benchmark, jumped another 7.5 percent to $83.58. It was close to $70 less than a week ago. Meanwhile, a barrel of benchmark US crude rose by 7.6 percent to $76.64.
Oil prices jumped after Iran struck the US embassy in Saudi Arabia, part of a widening range of targets that also include areas critical to the world’s oil and natural gas production.
Of particular concern is what will happen to the Strait of Hormuz off the coast of Iran, a narrow passage through which about a fifth of the world’s oil passes.
Making things uncertain for markets, questions are being raised as to how long this war can last.
US and Israeli strikes have already killed Iran’s Supreme Leader Ayatollah Ali Khamenei, but President Donald Trump has suggested the fighting could continue for weeks.
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Late Monday night, Trump said on his social media network, “Wars can be fought ‘forever,’ and very successfully” with the supply of munitions the United States possesses.
A spike in oil prices will worsen inflation, which is already too high for almost everyone, and put more pressure on American households and businesses by increasing gas bills and shipping products.
The average price of a gallon of gasoline in the US jumped 11 cents overnight to about $3.11, according to data from the AAA motorcycle club.
Because of this, the damage to stock markets so far has been concentrated in countries and companies that use a lot of oil, natural gas and other petroleum-based fuels.
In South Korea, a major energy importer, the Kospi stock index fell 7.2 percent, its worst day since two summers ago, as markets reopened after a holiday on Monday. He has been setting records recently.
Japan’s Nikkei 225 fell 3.1 percent, even though analysts say Japan has substantial energy reserves that last more than 200 days. In Europe, where natural gas prices soared, Germany’s DAX lost 3.8 percent.
On Wall Street, airlines continued to sink amid concerns about rising fuel bills. The war also led to canceled flights and stranded passengers.
United Airlines fell five percent, American Airlines sank 4.4 percent, and Delta Air Lines four percent.
Among the few gainers on Wall Street was Target, which rose 3.3 percent after reporting better-than-expected quarterly profit for the latest quarter. It also gave a projected profit range for this coming fiscal year, the midpoint of which was above analysts’ expectations.
In the bond market, government bond yields rose as concerns grew about worsening inflation. The yield on the 10-year Treasury note jumped to 4.09 percent from 4.05 percent late Monday and from just 3.97 percent on Friday.
Higher yields could mean more expensive credit for U.S. households and businesses, for everything from mortgages to bond issues. They also put downward pressure on stock prices and all kinds of other investments. Bitcoin once again fell below $67,000.
When Treasuries pay more interest, they can also lower the price of gold, which pays nothing to its investors. Gold fell 4.9 percent to $5,053.30 on Tuesday, halting a strong run that had taken it above $5,300 as investors looked for safer places to park money amid the war.
High inflation could also tie the Federal Reserve’s hands and prevent it from cutting interest rates. The Fed cut rates several times last year and hinted that more cuts would come in 2026. That would help boost the economy and inflation, but lower rates can also make inflation worse.
Traders are now shifting their expectations further into the summer when the Fed could continue to cut rates, according to CME Group data. And this despite Trump very angrily and personally urging Fed officials to cut rates immediately.
© 2026 The Canadian Press
