Stocks moved sharply lower at the start of trading on Monday in reaction to the conflict in the Middle East but showed a substantial recovery over the course of the session. The major averages climbed well off their lows of the session before eventually ending the day narrowly mixed.
After tumbling by as much as 1.6 percent, the Nasdaq rose 80.65 points or 0.4 percent to 22,748.86. The S&P 500 also inched up 2.74 points or less than a tenth of a percent to 6,881.62, while the narrower Dow dipped 73.14 points or 0.2 percent to 48,904.78.
The turnaround on the day came as traders used the initial sell-off as an opportunity to pick up stocks at reduced levels, with the Dow rebounding after hitting its lowest intraday level in two months.
Earlier, selling pressure was generated in reaction to the news that the U.S. and Israel launched joint strikes against Iran over the weekend, killing Iranian Supreme Leader Ayatollah Ali Khamenei.
Iran retaliated by launching waves of drones and missiles on countries across the Middle East, including Kuwait, the United Arab Emirates, Bahrain, Saudi Arabia, Oman, and Qatar.
The conflict in the region escalated further today after Israel launched airstrikes on Hezbollah targets in Beirut and other parts of Lebanon following projectile fire from Lebanese territory into northern Israel.
In remarks at the White House, President Donald Trump said the conflict with Iran is expected to last four to five weeks but said the U.S. has the “capability to go far longer than that.”
The attacks led to a spike in the price of crude oil, adding to recent concerns about the outlook for inflation.
“Scenes in the Middle East have caused widespread nervousness across financial markets,” said Dan Coatsworth, head of markets at AJ Bell. “The U.S. attacks on Iran have caused oil prices to soar amid fears of disruptions to supplies, pushing up costs for businesses and consumers.”
He added, “If the issues persist then the market will start to worry about new inflationary pressures and that could lower expectations for near-term interest rate cuts.”
In U.S. economic news, the Institute for Supply Management released a report showing a slight slowdown in the pace of growth in U.S. manufacturing activity in the month of February.
The ISM said its manufacturing PMI edged down to 52.4 in February after surging to 52.6 in January, but a reading above 50 still indicates growth. Economists had expected the index to dip to 51.8.
Sector News
Networking stocks moved sharply higher over the course of the session, driving the NYSE Arca Networking Index up by 3.7 percent to a record closing high.
The sharp increase by the price of crude oil also contributed to substantial strength among oil producer stocks, with the NYSE Arca Oil Index surging by 3.4 percent.
Natural gas, software and brokerage stocks also saw significant strength, while airline stocks plummeted amid concerns about travel disruptions due to the conflict in the Middle East.
Reflecting the weakness in the airline sector, the NYSE Arca Airline Index plunged by 4.1 percent to its lowest closing level in two months.
Considerable weakness was also visible among housing stocks, as reflected by the 2.0 percent slump by the Philadelphia Housing Sector Index.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index slumped by 1.4 percent, while Hong Kong’s Hang Seng Index tumbled by 2.1 percent.
The major European markets also showed significant moves to the downside on the day. While the German DAX Index dove by 2.4 percent, the French CAC 40 Index tumbled by 2.2 percent and the U.K.’s FTSE 100 Index slid by 1.2 percent.
In the bond market, treasuries pulled back sharply after moving notably higher over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, surged 8.6 basis points to 4.048 percent.
Looking Ahead
Amid a quiet day on the U.S. economic front, trading on Tuesday may be impacted by reaction to the latest developments in the Middle East.
Business News
U.S. Stocks Recover From Initial Sell-Off To Close Narrowly Mixed
2026-03-02 21:14:26
