The Dow Jones Industrial Average plunged nearly 800 points on Friday, entering correction territory as the Iran war continues to rattle global markets.
KEY TAKEAWAYS
The benchmark index has now fallen for five consecutive weeks, its longest losing streak since the early days of the pandemic. The S&P 500 is down approximately 12% from its February peak, while the Nasdaq has shed even more.
Oil Drives the Selloff
The primary catalyst remains crude oil. Brent crude has climbed above $110 per barrel as Iran's grip on the Strait of Hormuz continues to disrupt global supply. About 20% of the world's oil passes through the waterway, and traders are pricing in a protracted conflict.
Higher energy costs feed directly into inflation expectations, which in turn pressure the Federal Reserve to keep rates elevated. The result is a double hit to equities: higher costs squeezing margins and higher discount rates compressing valuations.
Flight to Safety
Investors are fleeing risk assets and piling into traditional safe havens. Treasury yields have fallen as bond prices rise, gold has hit new highs, and defensive sectors like utilities and consumer staples are outperforming.
The selloff has erased roughly $4 trillion in US equity market value since the conflict began in late February. Tech stocks, which led the rally through 2024 and early 2025, have been hit hardest as growth names suffer from rising rates.
What Analysts Are Saying
Wall Street strategists are divided on whether this is a buying opportunity or the start of something worse. Bulls point to strong corporate earnings and the resilience of the US economy outside of energy. Bears note that geopolitical risk is notoriously difficult to price and the Iran situation shows no signs of resolution.
Markets hate uncertainty, and right now there's no visibility on when or how this conflict ends. We're advising clients to stay defensive until the picture clarifies.
— Wall Street strategist
The volatility index (VIX) has spiked to levels not seen since the regional banking crisis in 2023, indicating elevated fear among options traders.
Next Week's Catalysts
Investors will be watching for any diplomatic developments in the Iran conflict, weekly jobless claims data, and comments from Federal Reserve officials on the inflation outlook.
The market's reaction to Friday's selloff will also be telling. If buyers step in early next week, it could signal that the correction has run its course. If selling accelerates, a formal bear market (20% decline) becomes increasingly likely.
TLDR
The Dow Jones Industrial Average entered correction territory on Friday, falling nearly 800 points to extend its losing streak to five weeks. The S&P 500 is now down approximately 12% from its February peak. Oil prices continue to climb as the Iran war disrupts supply through the Strait of Hormuz, with Brent crude above $110. Investors are fleeing risk assets and piling into Treasuries, gold, and defensive sectors. The selloff has erased roughly $4 trillion in US equity market value since the conflict began.
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