NEW YORK — Longbow Asset Management CEO Jake Dollarhide warned that markets are finally “settling into the idea” of a prolonged conflict as Wall Street ended sharply lower on Friday. The S&P 500 closed at its lowest level in six months as the military confrontation between the U.S.-Israel alliance and Iran entered its fourth week, intensifying global worries over persistent inflation and higher interest rates.
Market Performance & Sector Slump
The major indices suffered significant losses during a heavy “triple witching” trading session:
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Indices Tumble: The S&P 500 declined 1.51% to 6,506.48, while the Nasdaq slumped 2.01%, leaving it nearly 10% below its October record high. The Dow Jones Industrial Average fell 0.96% to 45,577.47.
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Tech “Magnificent Seven” Slide: Heavyweights Nvidia and Tesla both shed over 3%, while Alphabet, Meta, and Microsoft fell approximately 2%.
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Sector Highlights: Utilities and Real Estate led the decline, dropping 4.11% and 3.15% respectively. Conversely, the Energy sector logged its 13th straight weekly gain—its longest rally since the late 1980s—driven by surging oil prices.
Economic & Geopolitical Headwinds
Analysts suggest that the duration of the conflict, which began on February 28, is the primary driver of the current market deterioration:
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Inflationary Pressure: ING Head of Global Rates Strategy Padhraic Garvey noted that higher inflation expectations are directly linked to elevated oil prices, pushing U.S. Treasury yields higher.
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Rate Hike Expectations: Data from the CME FedWatch tool indicates that the Federal Reserve is now considered more likely to raise interest rates than cut them by the end of 2026.
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Corporate Fallout: Super Micro Computer shares plummeted 33% following charges related to the alleged smuggling of $2.5 billion in AI technology to China, while FedEx offered a rare bright spot with upbeat forecasts despite the regional instability.
