Quick overview

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U.S. equities moved higher on Tuesday, March 17, but lost momentum from earlier session highs as oil prices remained elevated following the joint U.S.-Israel attack on Iran amid escalating tensions in the Middle East.

At the same time, NATO declined to support President Donald Trump’s stance on reopening the Strait of Hormuz. In this context, the Dow Jones Industrial Average rose 0.10% to 46,993.87, the S&P 500 gained 0.25% to 6,716.19, and the Nasdaq Composite advanced 0.47% to 22,479.

Volatility remains contained, but risks are building

Major indexes had posted strong gains on Monday, driven by a rebound in technology stocks and a decline in oil prices. While equities continued to rise at Tuesday’s open, they gradually pared gains as crude prices resumed their upward trend.

“The rise in both oil and equities earlier in the session may seem contradictory, but following reports that Israel killed Iranian security chief Ali Larijani, there appears to be some short-term optimism,” said Jake Dollarhide, CEO of Longbow Asset Management.

“However, this remains a very fragile market. Any negative developments related to oil trade or the duration of the conflict could quickly trigger a pullback and a spike in the VIX,” he added.

Iran loses key senior figures

Israel reported that Larijani was killed in an airstrike on Monday, according to The Wall Street Journal. Other reports suggested that Gholamreza Soleimani, commander of the Basij paramilitary force, may also have died, though there has been no official confirmation from Iran.

As fighting continues, the strategically critical Strait of Hormuz — through which roughly 20% of global oil supply flows — remains largely restricted. Iran stated that the passage is open to all vessels except those linked to the United States and its allies.

Trump criticizes NATO over Hormuz stance

Trump criticized NATO members for refusing to back his request to help reopen the strait. “We no longer need or want NATO’s assistance; we never did,” he wrote on social media.

While the United Kingdom and France expressed willingness to discuss potential responses, other allies — including Germany and Japan — rejected the request. Trump had previously suggested the U.S. could act unilaterally, although he noted that “many countries” were willing to cooperate.

Oil prices have surged more than 40% since the start of the strikes in late February. The prospect of a prolonged conflict in Iran is increasing the risk of a global energy crisis, with direct implications for inflation.

Trump seeks to delay meeting with Xi

Separately, Trump requested to postpone a planned meeting with Chinese President Xi Jinping next month, just days after warning he would do so if China did not intervene to help reopen the strait.

Over the weekend, Trump urged Beijing to deploy its navy to secure the shipping route. However, China — the largest buyer of Iranian oil — has little incentive to align with Washington.

In fact, Tehran has allowed Chinese oil tankers to transit the strait while warning of potential attacks on vessels linked to the U.S. or its allies.