Wall Street experienced a sharp downturn on Thursday, March 5, 2026, as escalating tensions in the Middle East rattled investors. The Dow Jones Industrial Average fell 840 points, a 1.73% decline, to 47,885, erasing all gains from the previous day and extending losses. The S&P 500 dropped 0.82% to around 6,810, while the Nasdaq Composite decreased 0.50% to approximately 22,690. The Russell 2000 saw a more significant drop of 1.65%, closing near 2,590 as compact-cap stocks led the shift towards risk aversion.
The sell-off was broad-based, but the Dow’s underperformance was particularly notable, weighed down by defensive and consumer staple stocks. Shares of Merck, Johnson & Johnson, and Walmart each fell more than 2%. This market reaction underscores investors’ sensitivity to geopolitical risks and their impact on economic stability.
The catalyst for Thursday’s decline was a reported escalation of conflict in the Middle East. According to media reports, Iran claimed to have attacked a tanker with a missile, a claim confirmed by the British Navy, which reported a large explosion on a tanker anchored in Iraqi waters. The situation has raised concerns about potential disruptions to global oil supplies.
West Texas Intermediate (WTI) crude futures surged 6% to trade above $79 per barrel, reaching their highest level since June 2025, while Brent crude jumped 3% to over $84. Traffic through the Strait of Hormuz has effectively halted since the start of the conflict between the U.S., Israel, and Iran over the weekend, with Iran’s Islamic Revolutionary Guard Corps ordering the strait closed and threatening any passing vessels. Approximately 20% of the world’s oil consumption is exported through this crucial waterway.
Earlier in the week, President Trump stated that the U.S. Would provide political risk insurance for tankers and, if necessary, U.S. Navy escorts. Still, Thursday’s missile attack undermined that assurance. The situation remains fluid and is being closely monitored by global markets, as disruptions to oil flow could have significant economic consequences.
Investors are now seeking a negotiated resolution to the conflict, but uncertainty prevails. Markets are yearning for a negotiated exit, according to reports.
The Dow Jones has resumed its decline as it awaits developments regarding the Strait of Hormuz, while the Dow Jones index is falling as the situation in Iran worsens. Futures point to a lower opening for Wall Street in today’s session, although the movements are moderate.
