A wave of selling gripped Wall Street on Tuesday as the widening war between the U.S., Israel and Iran showed no sign of abating, driving crude oil sharply higher.

Drone strikes hit the US Embassy in Riyadh overnight, and the State Department ordered evacuations at facilities in Bahrain, Iraq, and Jordan. The reported potential closure of the Strait of Hormuz — through which roughly 20% of global oil flows — is the dominant market narrative of the session.

The West Texas Intermediate light crude jumped 6.4% to $75.8 a barrel, on pace for the sharpest 2-day rally since March 2022,. US natural gas rose 6.3% to $3.15, while European gas prices have almost doubled in two days.

Speaking alongside German Chancellor Friedrich Merz in the Oval Office, President Donald Trump stated that Iran no longer has air defenses or detection capabilities, while suggesting he may have preempted an Iranian strike on U.S. interests.

Trump also directed Treasury Secretary Scott Bessent to sever all trade relations with Spain after criticizing both Madrid and the U.K. as uncooperative in the conflict.

By 3:20 p.m. in New York:

• The S&P 500 was down 0.9% to 6,818
• The Nasdaq 100 fell 1.1% to 24,719
• The Dow Jones Industrial Average lost 0.7% to 48,567.
• The Russell 2000 declined 1.36% to 2,619.
• The CBOE Volatility Index surged 6% to 22.74, reflecting elevated near-term fear across options markets.

All 11 S&P 500 Sectors Traded In The Red

Materials led losses with the Materials Select Sector SPDR Fund (NYSE:XLB) down 2.9%, followed by the Industrial Select Sector SPDR Fund (NYSE:XLI) and the Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY), each off 1.9%.

Cruise operators extended Monday’s losses into a second consecutive session. Carnival Corp. & PLC (NYSE:CCL) fell 4.3%, Royal Caribbean Group (NYSE:RCL) shed 3% and Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) dropped roughly 5%, compounding the 10.5% wipeout that marked Monday’s session.

Tuesday’s Performance In Major US Indices, ETFs

According to Benzinga Pro data:

• The Vanguard S&P 500 ETF (NYSE:VOO) fell 1.5%.
• The SPDR Dow Jones Industrial Average (NYSE:DIA) fell 1.4%.
• The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) dropped 1.6%.
• The iShares Russell 2000 ETF (NYSE:IWM) traded 2.3% lower.

Traders Reprice Fed Cut Expectations: Gold And Emerging Markets Plunge On Dollar Strength

The energy shock is doing real damage to rate cut expectations.

The 10-year Treasury yield climbed above 4.10% before pulling back to approximately 4.06%, up from 3.97% on Friday, as inflation fears pushed traders to reprice Fed rate cut timing further into summer.

Traders are now betting on fewer chances of two Fed rate cuts in 2026.

In currency markets, the U.S. dollar surged, with the ICE U.S. Dollar Index on pace for its largest two-day advance since February 2023. The stronger dollar weighed heavily on precious metals.

Spot gold fell 4.6% to around $5,080 per ounce and silver plummeted 7.8% to $82 per ounce.

Emerging markets bore the brunt of the geopolitical shock.

The iShares MSCI South Korea ETF (NYSE:EWY) plunged 10.7% to $131.74, the iShares MSCI South Africa ETF (NYSE:EZA) fell 9.0% and the iShares MSCI Brazil ETF (NYSE:EWZ) dropped 5.3%.

Tuesday’s Earnings Movers

On the earnings front, MongoDB, Inc. (NASDAQ:MDB) was the session’s most notable casualty, crashing 21.24% to $255.97 after issuing weak revenue guidance. On Holding AG (NYSE:ONON) slumped 9.23% to $42.44 after its 2026 sales outlook fell short of analyst estimates.

Target Corp. (NYSE:TGT) and Best Buy Co. Inc. (NYSE:BBY) were among the few earnings winners, with TGT rising on a quarterly profit beat and BBY surging following strong guidance.

Other notable movers included Ingram Micro Holding Corporation (NYSE:INGM), up 15.92% to $24.75, AST SpaceMobile, Inc. (NASDAQ:ASTS), up 10.58% to $96.12 and Pinterest, Inc. (NYSE:PINS), which gained 7.00% to $18.70.

Russell 1000’s Top 5 Gainers And Losers On Tuesday

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