Markets Plunge on Iran War

The latest market turmoil follows the launch of "Operation Epic Fury," a joint U.S.-Israeli military campaign that began on February 28, 2026. The initial wave of over 2,000 strikes targeted Iranian military infrastructure, command and control facilities, and resulted in the death of Iran's Supreme Leader, Ayatollah Ali Khamenei. In response, Iran has launched retaliatory missile and drone attacks on U.S. bases and allied countries in the Gulf. Investor anxiety is centered on the Strait of Hormuz, a critical chokepoint through which roughly 20% of the world's total oil consumption passes daily. The strait also handles about 20% of global liquefied natural gas (LNG) trade, with tanker traffic dropping to near zero after Iran warned vessels against passage. Major shipping firms have suspended transit, raising the prospect of a sustained energy supply shock. Historically, market downturns from Middle East conflicts are often sharp but brief. In 19 of 20 major military conflicts since World War II, the S&P 500 took an average of only 28 days to recover. However, events that caused prolonged energy disruptions, like the 1973 oil embargo and the 1990 Iraq invasion of Kuwait, led to double-digit market losses. The tech sector's sharp decline is tied directly to the multifaceted impact of an oil price shock. Spiking energy prices drive up costs for manufacturing, transportation, and petrochemicals—key inputs for electronics and other tech hardware. This squeeze on profit margins, combined with fears of reduced consumer spending due to inflation, has made growth-oriented tech stocks particularly vulnerable.