Highlights

  • S&P 500, Dow and Nasdaq-100 close at multi-month lows amid oil and war-driven volatility.
  • Brent crude spikes above USD 85 before settling at USD 81.40, up 4.7%.
  • Defense stocks rally while mega-cap tech weakens; volatility index jumps 23%.

U.S. equities extended losses Tuesday as surging oil prices, rising bond yields and escalating Middle East tensions fuelled inflation concerns. The Nasdaq-100 fell 1.09%, while the S&P 500 declined 0.94% to a 3.25-month low and the Dow Jones Industrial Average dropped 0.83% to a 2.75-month low.

Futures mirrored the weakness, with March E-mini S&P (ESH26) down 0.94% and March E-mini Nasdaq (NQH26) falling 1.11%. Despite heavy early selling — including a more than 1,200-point intraday plunge in the Dow — markets finished well off their lows, with the Dow closing 404 points lower.

Oil Surge and Escalating Conflict Drive Volatility

Brent crude briefly topped USD 85 per barrel for the first time since mid-2024 before easing to settle at USD 81.40, still up 4.7%. Prices retreated after Donald Trump said the U.S. Navy could escort tankers through the Strait of Hormuz.

However, U.S. officials signalled strikes against Iran could intensify for weeks, while Tehran continued attacks on Gulf nations. Oil tanker traffic through a key Persian Gulf route has nearly stalled, raising fears of supply disruptions and renewed inflation pressure.

Sector Rotation: Defense Gains, Tech Under Pressure

Defense and industrial stocks outperformed amid geopolitical uncertainty. AeroVironment (NASDAQ:AVAV) surged 9.6%, while Honeywell (NASDAQ:HON) gained as investors sought defensive exposure.

Technology stocks bore the brunt of selling. Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) fell more than 2%, and MongoDB (NASDAQ:MDB) plunged 22.5% on weak guidance.

Meanwhile, Nvidia (NASDAQ:NVDA) bucked the trend, rising 3% as investors continued favouring AI-driven growth.

Technical Damage and Volatility Surge

The S&P 500, Dow and Nasdaq-100 all closed at multi-month lows. The Nasdaq-100 broke below key support near 24,500 and under its 100-day moving average. The CBOE Volatility Index (VIX) jumped 23% to 27.30, signalling heightened market stress.

Traders are closely watching the 24,300 level on the Nasdaq-100, with downside risk toward 23,800–24,000 if support fails.

FAQs

  1. Why did the Nasdaq-100 and broader U.S. indexes fall to multi-month lows?
    The sell-off was driven by a sharp spike in oil prices, rising U.S. Treasury yields, and escalating Middle East tensions. Higher energy prices increased inflation concerns, reducing expectations for near-term rate cuts and pressuring growth-heavy indexes like the Nasdaq-100.
  2. Why did defense stocks rise while technology stocks declined?
    Investors rotated into defensive sectors amid geopolitical uncertainty. Defense contractors benefited from expectations of increased military spending, while mega-cap tech stocks faced pressure due to higher yields and valuation concerns.
  3. What key levels are traders watching on the Nasdaq-100?
    Traders are monitoring support around 24,300. A sustained break below this level could open downside risk toward the 23,800–24,000 range, while resistance is seen near 24,500–24,615.