Wall St futures slide as Middle East conflict escalates
March 2 (Reuters) - U.S. stock index futures fell over 1% on Monday, with investors increasingly pricing in the prospect that the conflict in the Middle East could persist for weeks, potentially disrupting global trade flows and adding to inflationary pressures.
Sectors that were hit the most in premarket trading included airlines, as several carriers halted flights and crude prices shot up 8%, while an overall cloudy outlook for the global economy weighed on financial stocks.
Delta DAL.N and United Airlines UAL.O tumbled over 5% each in premarket trading. Big banks such as Bank of America BAC.N and Citigroup C.N slid over 2% each.
Investors instead flocked to traditional safe havens such as the dollar USD=, while higher precious metal prices helped miners such as Gold Fields GFI.N gain 3.6% and Barrick Mining B.N added 2.8%.
Also getting a bid were defense stocks such as Lockheed Martin LMT.N and RTX RTX.N that jumped around 6% each, while Kratos KTOS.O surged 9% and AeroVironmentAVAV.Ojumped 10.3%.
After coordinated U.S. and Israeli strikes on Iran over the weekend killed Supreme Leader Ayatollah Ali Khamenei, Israel launched retaliatory attacks following air strikes by Iran and Hezbollah militants in Lebanon, deepening fears that the conflict could widen further across the region.
More: Oil jumps, stocks sell off as trading gets underway amid Iran strikes
U.S. President Donald Trump also said the conflict could stretch on for another four weeks, according to a report, adding that attacks would continue until the U.S. achieves its stated objectives.
"Jumping to conclusions about President Trump's weekend policy actions and comments can be a mistake as often as it is the right course of action, but the most important part of the president's broadcast yesterday was that U.S. action will continue for 'weeks', rather than days. That promises a more durable market impact," SocGen analysts said in a note.
At 4:17 a.m. ET, Dow E-minis YMcv1 were down 572 points, or 1.17%, S&P 500 E-minis EScv1 were down 75.75 points, or 1.1%, and Nasdaq 100 E-minis NQcv1 were down 364.5 points, or 1.46%.
Wall Street's fear gauge, the CBOE VIX index .VIX jumped 3.84 points to a three-month high of 23.7.
The geopolitical shock comes at a time when markets are already in a state of uncertainty over AI-disruption worries, jitters in the private credit space and a cloudy trade outlook.
The S&P 500 and the Nasdaq posted their steepest monthly drops since March 2025. In contrast, the Dow managed to eke out gains for a tenth consecutive month, its longest winning streak since a 10-month run that ended in January 2018.
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