Updated on: March 3, 2026 / 9:23 PM EST / CBS News
Stocks trimmed early losses Tuesday as investors assessed the economic fallout from widening conflict in the Middle East and potential impacts on global oil supplies. The Dow Jones Industrial Average closed down 404 points, or 0.8%, at 48,501; the S&P 500 fell 65 points, or 0.9%, to 6,817; and the Nasdaq Composite slid about 1%. Earlier in the session the Dow plunged more than 1,200 points, its largest one-day drop since April 2025.
Markets steadied after former President Donald Trump posted on Truth Social that the U.S. would offer “political risk insurance” for ships transiting the Persian Gulf at a “very reasonable price” and said the U.S. Navy would escort tankers through the Strait of Hormuz if needed. “Oil prices retreated after news the U.S. will ensure safe passage through the Strait of Hormuz, easing fears of a major global supply shock,” said Adam Turnquist, chief technical strategist at LPL Financial.
Analysts said uncertainty about how long the conflict will last and its impact on energy markets has rattled investors. The situation escalated after a U.S.-Israeli operation last week killed Iran’s supreme leader, Ayatollah Ali Khamenei, and other senior officials, raising questions about who will fill the leadership vacuum. “Markets hate uncertainty, and as uncertainty deepens in the Middle East, investors are getting jittery,” said Bret Kenwell, an investment analyst at eToro.
Wall Street is closely watching flows through the Strait of Hormuz, a chokepoint for roughly 20% of global oil shipments. Brent crude, the international benchmark, rose $3.49, or 4.5%, to $81.13 a barrel on Tuesday; U.S. crude climbed $2.99, or 4.2%, to $74.22, per FactSet.
The 10-year Treasury yield moved up to 4.06%, a modest increase that suggests investors are bracing for higher inflation if oil stays elevated. Investment advisory firm Capital Economics warned a sustained rise in oil to $90–$100 a barrel could add to U.S. inflationary pressures. Rising Treasury yields also tend to push mortgage rates higher, which could weigh on a housing market that recently saw 30-year fixed rates dip below 6% for the first time since 2022.
In response to reduced Iranian exports, eight OPEC+ members — Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman — said they would boost production by a combined 206,000 barrels per day. But EY-Parthenon chief economist Gregory Daco said the additional output is modest relative to volumes that transit the Strait of Hormuz and “insufficient to neutralize the effects of a meaningful or sustained disruption.”
Edited by Alain Sherter