Updated on: March 3, 2026 / 9:23 PM EST / CBS News
Stocks pared early losses Tuesday as investors weighed the potential economic fallout from the Iran war, including effects on global oil supplies. The Dow Jones Industrial Average slid 404 points, or 0.8%, to close at 48,501, the S&P 500 fell 65 points, or 0.9%, to 6,817, and the Nasdaq Composite dropped about 1%. Earlier in the day the Dow plunged more than 1,200 points, its largest one-day drop since April 2025.
Markets stabilized after former President Trump posted on Truth Social that the U.S. would provide “political risk insurance” at a “very reasonable price” for ships transiting the Persian Gulf and said the U.S. Navy would escort tankers through the Strait of Hormuz if necessary. “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,” Adam Turnquist, chief technical strategist at LPL Financial, said.
Analysts say uncertainty about the duration of the conflict and its effect on energy markets has unsettled investors. The situation intensified after a U.S.-Israeli operation last week killed Iran’s supreme leader, Ayatollah Ali Khamenei, and other senior officials, creating 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 also watching oil flows through the Strait of Hormuz, a chokepoint for roughly 20% of the world’s oil. Brent crude, the international benchmark, rose $3.49, or 4.5%, to $81.13 a barrel on Tuesday; U.S. crude rose $2.99, or 4.2%, to $74.22, according to FactSet.
The 10-year Treasury yield climbed to 4.06%, a modest increase that signals investors are bracing for higher inflation if oil prices remain elevated. Investment advisory firm Capital Economics warned that a sustained rise in oil to $90–$100 per barrel could ramp up U.S. inflationary pressures. Higher Treasury yields also tend to push mortgage rates up; that 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 — including 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 noted that additional output would be modest relative to volumes passing through the Strait of Hormuz and “insufficient to neutralize the effects of a meaningful or sustained disruption.”
Edited by Alain Sherter
