March 2 (Reuters) – U.S. stock index futures fell more than 1% on Monday, as investors increasingly priced in the prospect that the conflict in the Middle East could drag on for weeks, potentially disrupting global trade flows and adding to inflationary pressures.
Sectors hardest hit in pre-market trade included airlines, as several carriers grounded flights and crude oil prices rose 8%, while an overall cloudy outlook for the global economy weighed on financial stocks.
Delta DAL.N and United Airlines UAL.O each fell more than 5% in premarket trading. Major banks such as Bank of America BAC.N and Citigroup CN each fell more than 2%.
Investors instead flocked to traditional safe havens such as the dollar USD=, while higher precious metal prices helped miners such as Gold Fields GFI.N added 3.6% and Barrick Mining BN added 2.8%.
Also gaining in bids were defense stocks such as Lockheed Martin LMT.N and RTX RTX.N, which rose about 6% each, while Kratos KTOS.O jumped 9% and AeroVironmentAVAV.O jumped 10.3%.
After a coordinated US-Israeli attack on Iran over the weekend killed Supreme Leader Ayatollah Ali Khamenei, Israel launched retaliatory strikes in Lebanon following airstrikes by Iranian and Hezbollah militants, deepening fears that the war could spread further across the region.
Other: Oil rises, stocks sell off as trading amid Iran strikes
US President Donald Trump also said that the war may continue for another four weeks. According to a report, the attacks will continue until the US reaches its target.
“Jumping to conclusions about President Trump’s weekend policy actions and comments may be a mistake because that’s the right course of action, but the most important part of the president’s broadcast yesterday was that US action will last for weeks rather than days,” Suk Jin analysts said in a note, promising a more sustained market impact.
At 4:17 a.m., the Dow E-minis YMcv1 were down 572 points or 1.17%, the S&P 500 E-minis EScv1 were down 75.75 points or 1.1%, and the Nasdaq 100 E-minis NQcv1 were down 365 points or 364%.
Wall Street’s gauge of fear, the CBOE VIX index .VIX, rose 3.84 points to a three-month high of 23.7.
The geopolitical shock comes at a time when markets are already in a state of uncertainty over AI-disruption concerns, disruptions in the private credit space and the outlook for business clouds.
The S&P 500 and Nasdaq posted their biggest monthly declines since March 2025. In contrast, the Dow managed to post a 10th consecutive month of gains, its longest winning streak since the 10-month period that ended in January 2018.
Ayatollah Ali Khamenei
