Stock Market Recap: Iran Conflict Sends Dow Jones Down 500 Points
Stocks are mostly down for Monday as conflict erupts in the Middle East over the assassination of the Ayatollah.
Quick overview
- US stock futures dropped sharply due to escalating conflict between Israel, the US, and Iran, with the Dow Jones losing over 500 points.
- The Dow is down 1.0%, while the Nasdaq Composite and S&P 500 also experienced losses amid rising market fears.
- Gold futures increased by 3%, and the stock market fear gauge (VIX) reached its highest level since November.
- AI stocks are facing intense selling pressure, with concerns over overspending and employment impacts, leading to significant losses for companies like Salesforce.
US stock futures fell sharply on Monday as Israel and the United States engaged in armed conflict with Iran, causing the Dow Jones to lose over 500 points.
The Dow is down 1.0% on Monday as the week begins, with the Nasdaq Composite losing 0.92%, and the S&P 500 dropping 0.43%. The indices are expected to fall further as conflict between the United States and Iran escalates with missile attacks spreading fear through the Middle East region.
Gold futures rose 3% while the stock market fear gauge (VIX) rose 23%, hitting a high point not seen since November. Investors should expect an unstable stock market for now as the fighting has only begun, sparked by the assassination of Iran’s Ayatollah Ali Khamenei on Saturday.
Sustained Fighting Could Erase 2026’s Gains
The stock market has been widely bullish in 2026, with strong growth across multiple stock niches. Energy, pharmaceutical, and retail stocks have impressed while technology stocks have had an uneven year, and the Nasdaq Composite is not far from its record high.
AI-related stocks have been under pressure over the last few weeks during a round of earnings reports, and investors are worried about companies overspending on AI development as well as the impact of AI growth on employment opportunities. This has left many leading AI stocks suffering and created a class of poorly performing AI-related stocks that may not survive the waves of fear that have been spreading through the market since November of last year.
Lori Keith, the manager of the Parnassus Mid Cap Fund says that there are very strong investor reactions to the AI market right now that has created a “differentiated framework of winners, adapters, and business models that could see margin compression.” In other words, there will be losers in this AI stock shift, and one of those at the moment is Salesforce (CRM). This stock has lost 27% of its value since mid-January.
AI stocks are likely to be hit hard by ongoing conflict in Iran as well as the new global tariffs that could move from 10% to 15%, if President Donald Trump has his way. Alphabet (GGOGL) is struggling this morning with 2.14% in losses, but Microsoft (MSFT) is up by 0.70%. The stock market is mostly bearish right now, but a few stocks are still performing well despite incredible selling pressures.
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