S&P 500 sinks 2%, US bond yields surge as Iran war shows no signs of abating| Business News
US stocks fell and bonds deepened losses as the Iran war showed no signs of de-escalation, heightening fears of a lengthy disruption to energy markets and a surge in inflation. Brent briefly topped $85. Traders work on the floor at the New York Stock Exchange in New York City on Tuesday, 3 March 2026. Markets are repricing for the risk of a more extended Iran war. (Reuters) In a broad selloff, the S&P 500 sank 2% toward its lowest since December. As soaring energy prices cast a pall over the ability of central banks to keep inflation in check, traders are now betting on fewer chances of two Federal Reserve rate cuts in 2026. Ten-year yields were set for their biggest two-day advance since April. The dollar rose. Gold halted a four-day rally. “Markets are repricing for the risk of a more extended Iran war,” said Krishna Guha at Evercore. “The duration of higher oil and gas is key.” Stocks on the Move The S&P 500 fell 2.1% as of 10:15 am in New York The Nasdaq 100 fell 2.1% The Dow Jones Industrial Average fell 2.3% The Stoxx Europe 600 fell 3.3% The MSCI World Index fell 2.6% The Iran war reverberated across the Middle East, with Tehran sending missiles at Qatar, Bahrain and Oman. Doha said targets weren’t limited to military interests. Israel said that it struck the leadership compound in Tehran and sent soldiers into southern Lebanon. Two drones struck near the US embassy in Riyadh, causing limited damage. An adviser to Iran’s Islamic Revolutionary Guard Corps commander told State TV that forces “will set fire to any ship attempting to pass through” Strait of Hormuz. While oil production in the region remains largely unaffected, flows through the vital shipping lane have been “significantly impacted,” the International Energy Agency said in a document seen by Bloomberg News. Currencies & Bonds The Bloomberg Dollar Spot Index rose 1.1% The euro fell 1.2% to $1.1548 The British pound fell 1% to $1.3271 The Japanese yen fell 0.2% to 157.75 per dollar The yield on 10-year Treasuries advanced four basis points to 4.07% Germany’s 10-year yield advanced six basis points to 2.77% Britain’s 10-year yield advanced 14 basis points to 4.51% Any suggestion that flows through this chokepoint could be restricted is enough to unsettle commodity desks, and recent developments have done exactly that, according to Fawad Razaqzada at Forex.com. “Markets are trading headline to headline. Energy is bid, equities are uneasy, and volatility is back on the agenda. Much will depend on whether tensions stabilise— or whether this proves to be the start of a more prolonged disruption to global supply,” he said. About 95% of the shares in the S&P 500 fell. The Russell 2000 index of small firms sank 3.5%. The yield on 10-year Treasuries climbed six basis points to 4.09%. The dollar rose 1%. A prolonged conflict in the Middle East pushing oil to $90-$100 for a sustained period would be a significant headwind for the global economy, according to Jennifer McKeown at Capital Economics. “Importers such as the eurozone would be hit hardest, while damage to production and export capacity would cap gains for exporters in the Middle East itself,” she said. “The adverse effects should be limited by central banks ‘looking through’ the shock and avoiding rate hikes, but cuts would probably be delayed.” Commodities Check West Texas Intermediate crude rose 8.4% to $77.18 a barrel Spot gold fell 5.4% to $5,035.53 an ounce Brent crude briefly tops $85/barrel Barring a prolonged disruption of global oil supplies, the conflict is unlikely to end the cyclical stock bull market by itself, according to Ed Clissold and Thanh Nguyen at Ned Davis Research, who has been tracking crisis events for decades—logging 59 since 1907. The market has tended to decline during the event itself, by an average of 7% and a median of 3%, they noted. Once the crisis has passed, the market has recovered within a few months, on average. The exceptions have been when a crisis damages the economy, such as the Bear Sterns collapse in 2008 or Arab oil embargo in 1973. “Assuming hostilities subside in the coming days or weeks, we would expect the market reaction to be similar to the majority of crisis events,” said the NDR strategists. Corporate Highlights Target Corp. forecast better-than-expected profit for the full year, indicating the big-box retailer’s turnaround plans are starting to generate results. Best Buy Co. reported profit for the holiday-shopping season that was better than expected. Apple Inc. updated its two main laptop computer lines, adding faster processors to the MacBook Air and MacBook Pro and raising prices amid an industrywide memory crunch.
Iraq halves output at Rumaila oilfield as Strait of Hormuz is blocked| Business News
Iraq has more than halved production at the world’s second largest oilfield after the Islamic Revolutionary Guard Corps declared the Strait of Hormuz closed amid an escalating Iran war. The Ministry of Oil (Iraq). (Reuters) Rumaila, a 1.2 million-bpd oilfield operated by the state-owned Basra Oil Co., has cut production by 700,000 bpd due to overloaded storage, Reuters reported on Tuesday, citing Iraqi officials. That, after a chocked Strait of Hormuz has slowed the arrival of tankers for crude oil exports. Production at the West Qurna 2 oilfield has also been cut, by 460,000 bpd. Iraq will be forced to cut its oil production by more than 3 million barrels per day in a few days if oil tankers cannot move freely through the Strait of Hormuz and reach its loading ports, the Iraqi officials said. Already, storage of crude oil has reached critical levels at Iraq’s southern ports, they said. Strait of Hormuz Traffic through the Strait of Hormuz was closed for a fourth day on Tuesday. On Monday, an IRGC official said Iran would fire on any ship trying to pass through, according to Iranian media reports. At least three oil tankers in the waterway have been attacked so far. Just 21 miles across at its narrowest, the Strait of Hormuz carries 20% of global oil and gas supply, everyday. Every major oil-producing nation in the Persian Gulf—Saudi Arabia, Iraq, Kuwait, the UAE, Qatar, Bahrain and Iran itself—must route its exports through this single passage. There is no overland alternative, no bypass canal, no pipelines. ALSO READ | Crude shock for India as it emerges most vulnerable to Iran war Iran war impact on Crude Oil, Gas The partial shutdown of the Rumaila oilfield comes a day after Saudi Aramco shut its Ras Tanura oil refinery after an Iranian drone attack at the facility. Elsewhere, Qatar has shut down the world’s largest LNG terminal at Ras Laffan, sending gas prices through the roof in Europe.
$20,000 drones take on $4 million patriots| Business News
Just three days into the conflict, the Iran war has become attritional. Waves of drone attacks by the Islamic Republic are putting pressure on the defenses of the US and its partners from Bahrain to the United Arab Emirates, depleting weapons stockpiles. The outcome of the fight may depend on which side runs out of munitions first. This satellite image provided by Vantor shows damage after a drone attack at Ras Tanura oil refinery in Saudi Arabia on Monday, 2 March 2026. (AP) Shahed-136 one-way attack drones, small, rudimentary cruise missiles, continued to pound targets across the Middle East on Monday. The drones have in recent days hit US bases, oil infrastructure and civilian buildings, since the US and Israel air strikes on Iran — a barrage of cruise missiles, drones and precision-guided bombs — began on Saturday. US-made Patriot air-defense missiles have been largely successful in stopping the Iranian Shaheds and other ballistic missiles, with interception rates over 90%, according to the UAE. But using $4 million missiles to destroy $20,000 drones illustrates a problem that has haunted Western military planners since early in the Ukraine war: The cheap weapons can chew up resources meant for much more complex threats. The result is that both Iran and the US may run low on weapons in a matter of days or weeks. Whoever can last longer will gain a serious advantage. Iran’s regional proxies were severely weakened by the war in Gaza and its missile capabilities damaged by the earlier Israel-US attacks in a 12-day war in June. Since then the emphasis for Iran has been to escalate its warnings about the consequences and costs of a Trump strike, knowing that his supporters are broadly opposed to drawn-out, messy wars. Iran’s Supreme Leader Ali Khamenei — who died in Saturday’s air strikes — warned that a US attack would lead to wider conflagration embroiling the whole region. “Attrition strategy makes operational sense from Iran’s perspective,” said Kelly Grieco, a senior fellow at the Stimson Center think-tank. “They are calculating the defenders will exhaust their interceptors and the political will of Gulf states will crack and put pressure on the US and Israel to cease operations before they run out of missiles and drones.” Qatar’s stocks of Patriot interceptor missiles will last four days at the current rate of use, according to an internal analysis seen by Bloomberg News. Doha has been privately urging a swift end to the conflict. Iran was estimated to have about 2,000 ballistic missiles after last year’s conflict with Israel. It’s likely to have a much larger number of Shaheds, which Russia, the other main manufacturer, has been able to produce at a rate of several hundred per day, according to analysis by Becca Wasser, defense lead at Bloomberg Economics. Tehran has fired more than 1,200 projectiles since the start of this year’s conflict, with many — perhaps most — of them being Shaheds. That suggests they could be saving more damaging ballistic missiles for sustained attacks, Wasser added. Iran’s military is acting apparently without close or frequent coordination with the civilian leadership including the ministry of foreign affairs, according to Foreign Minister Abbas Araghchi. “Our military units are now in fact independent and somehow isolated and they are acting based on instructions, general instructions given to them in advance,” Araghchi, a veteran of the Islamic Revolutionary Guard Corps, said in an interview to Al Jazeera on Sunday. On the US side, Wasser added, strike planners are unlikely to have moved enough munitions to the region to continue for four weeks, as President Donald Trump has estimated they would. US Defense Secretary Pete Hegseth said at a news conference on Monday that: “This is not Iraq, this is not endless.” Defensively, Iran has little left to fight with. The aerial attacks in the opening hours of the war hit its surface-to-air batteries, the most modern of which were Russian-made S-300s. US and Israeli fighters have been operating in Iranian airspace without any reported difficulties since then. The US and its regional partners mainly use Lockheed Martin Corp. Patriot air-defense systems firing PAC-3 missiles. Although the Pentagon has pushed to increase production, only about 600 PAC-3 missiles were built in 2025, according to Lockheed. Based on how many missiles and drones have been reported shot down, thousands of interceptors have most likely been fired in the Middle East since Saturday. Saudi Arabia and the United Arab Emirates also operate THAAD, a Lockheed system designed to hit more advanced, faster moving missiles at the edges of the atmosphere. Those are unlikely to be used against anything else, and are even more expensive, at about $12 million per missile. The US has also used patrols of fighter jets using Advanced Precision Kill Weapon System missiles, which cost $20,000 to $30,000 each plus the operating cost of the jets. Purpose-built anti-drone defenses are less common in the region. Using lasers, automatic cannons or even other drones can be a cheaper way to protect towns, cities and installations, saving expensive systems for bigger problems. The Iron Beam laser developed by Israeli defense company Rafael Advanced Defense Systems is meant to address this issue, but the Israel Defense Forces said on Monday it had not yet been used in the conflict. If the current intensity of Iranian strikes continues, PAC-3 stockpiles in the region could run dangerously low within days, according to a person familiar with the matter who asked not to be identified discussing sensitive details. If offensive weapons do too, stalemate could take hold. “In the meantime, Iran’s inventory of missiles and drones may draw down and the regime itself might be able to remain intact, if in chaos,” said Ankit Panda, a senior fellow at the Carnegie Endowment for International Peace. “This seems to be a likely outcome based on the first 60 hours of this war.”
