Wall St futures slide as Middle East conflict escalates

By Reuters

March 2, 20263:01 AM EST

• Futures down: Dow 1.17%, S&P 500 1.1%, Nasdaq 1.46%
• Airline and financial stocks hit hard, defense stocks rise
• Investors turn to safe havens including precious metals, dollar

March 2 (Reuters) – U.S. stock index futures fell over 1% on Monday, 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 and crude prices shot up 8%, while an overall cloudy outlook for the global economy weighed on financial stocks.

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Delta (DAL.N), opens new tab and United Airlines (UAL.O), opens new tab tumbled over 5% each in premarket trading. Big banks such as Bank of America (BAC.N), opens new tab and Citigroup (C.N), opens new tab slid over 2% each.

Investors instead flocked to traditional safe havens such as the dollar , while higher precious metal prices helped miners such as Gold Fields gain 3.6% and Barrick Mining added 2.8%.

Also getting a bid were defense stocks such as Lockheed Martin (LMT.N), opens new tab and RTX (RTX.N), opens new tab that jumped around 6% each, while Kratos (KTOS.O), opens new tab surged 9% and AeroVironment (AVAV.O), opens new tab jumped 10.3%.

After coordinated U.S. and Israeli strikes on Iran over the weekend killed Supreme Leader Ayatollah Ali Khamenei, 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.

U.S. President Donald Trump also said the conflict could stretch on for another four weeks, according to a report, adding that attacks would continue until the U.S. achieves its stated objectives.

“Jumping to conclusions about President Trump’s weekend policy actions and comments can be a mistake as often as it is the right course of action, but the most important part of the president’s broadcast yesterday was that U.S. action will continue for ‘weeks’, rather than days. That promises a more durable market impact,” SocGen analysts said in a note.

At 4:17 a.m. ET, Dow E-minis were down 572 points, or 1.17%, S&P 500 E-minis were down 75.75 points, or 1.1%, and Nasdaq 100 E-minis were down 364.5 points, or 1.46%.

Wall Street’s fear gauge, the CBOE VIX index (.VIX), opens new tab jumped 3.84 points to a three-month high of 23.7.

The geopolitical shock comes at a time when markets are already in a state of uncertainty over AI-disruption worries, jitters in the private credit space and a cloudy trade outlook.

The S&P 500 and the Nasdaq posted their steepest monthly drops since March 2025. In contrast, the Dow managed to eke out gains for a tenth consecutive month, its longest winning streak since a 10-month run that ended in January 2018.

A prolonged spike in oil prices would risk reigniting inflationary pressures, with traders already dealing with a hot inflation reading that fortified expectations that the U.S. Federal Reserve is unlikely to cut its key interest rate in the near term.

Traders are also bracing for a slate of key U.S. economic releases. Manufacturing PMIs for last month are due later in the day, while January retail sales, ADP employment figures, and the closely watched non-farm payrolls report are scheduled for later in the week.

Reporting by Pranav Kashyap, Johann M Cherian and Shashwat Chauhan in Bengaluru; Editing by Sherry Jacob-Phillips and Maju Samuel

Our Standards: The Thomson Reuters Trust Principles.

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