Major Indexes Sink at Open as Iran War Escalates; Oil, Treasury Yields Jump Further

Major stock indexes retreated at the open Tuesday, with the Dow Jones Industrial Average losing 875 points, as the conflict in the Middle East escalated. Meanwhile, oil futures soared for a second straight day. 

The tech-heavy Nasdaq, blue-chip Dow, and benchmark S&P 500 opened down 2%, 1.8%, and 1.6%, respectively. Yesterday, the Nasdaq and S&P 500 rallied to post modest gains, while the blue-chip Dow Jones Industrial Average ended down 0.2%.

Fighting in the Middle East has shown no signs of slowing down since the U.S. and Israel launched military strikes against Iran early Saturday, including one that killed its Supreme Leader, Ali Khamenei. Iran, in turn, has retaliated against Israel and U.S. interests in several countries across the region, with Saudi Arabian officials blaming the nation for a drone attack on the U.S. embassy in Riyadh early Tuesday, and the State Department urged Americans to leave 14 Middle East countries immediately. President Donald Trump said the U.S. plans to continue its combat operations in Iran for four to five more weeks but could go longer.

West Texas Intermediate crude oil futures, the U.S. benchmark, were up 6.5% to near $76 a barrel in recent trading. They had jumped 8% Monday after Reuters reported that Iranian state media said the nation claimed the important Strait of Hormuz was closed and it would set fire to any ship trying to pass.

Shares of U.S. oil companies Exxon Mobil (XOM), Chevron (CVX), Marathon Petroleum (MPC), Occidental Petroleum (OXY), and Phillips 66 (PSX) rose for a second straight session. Defense contractors Lockheed Martin (LMT), RTX (RTX), and Northrop Grumman (NOC) also advanced for a second straight day to begin the week, but Palantir Technologies (PLTR), another government contractor, was down slightly after having surged 5.8% yesterday to rank among the top S&P 500 and Nasdaq gainers.

Shares of U.S. airlines like Delta Air Lines (DAL), United Airlines Holdings (UAL), and American Airlines Group (AAL) were sharply lower for a second consecutive session, as were those of cruise operators Norwegian Cruise Line Holdings (NCLH), Carnival (CCL), and Royal Caribbean Group (RCL).

Nvidia (NVDA) shares, which rebounded nearly 3% to pace the Dow yesterday after two sessions of sharp declines, were down 2%. Most of the other members of the Magnificent Seven group of tech giants also were lower.

Target (TGT) stock was 2.5% higher after the retailer issued better-than-expected full-year profit and revenue guidance. In other post-earnings moves, shares of Plug Power (PLUG) jumped 14%, Best Buy (BBY) rose 4%, and MongoDB (MDB) plunged 29%.

Bitcoin was trading around $67,200, down from overnight highs of about $69,700, as investors shied away from riskier assets. The U.S. dollar index, which tracks the value of the greenback against a basket of currencies, was nearly 1% higher at 99.26.

The yield on the 10-year Treasury notes, which affects interest rates on all sorts of consumer loans, jumped to near 4.12% after closing Monday at 4.04%. The yield had ended last week at 3.95%

Gold futures pulled back 2.6% to $5,175 an ounce, while silver futures sank 7% to $82.70 an ounce.