Iran War, SNS Verdict: What’s Happening in the New York Stock Market?

On the 26th (local time), U.S. equity markets suffered their steepest decline since the outbreak of the Iran war. The S&P 500 fell 1.7% to 6,477.16, while the Nasdaq plunged 2.4%, dropping more than 10% from its year-to-date high and officially entering correction territory. The Dow closed down 1% at 45,960.11. Investor sentiment clearly shifted from risk-on to risk-off.

The immediate catalyst was renewed Middle East geopolitical risk. As the Iran conflict shows signs of a protracted escalation and Tehran tightens control over the Strait of Hormuz, concerns about a global oil supply disruption resurfaced. Brent crude surged to $101.89 per barrel, and the U.S. 10-year Treasury yield rose to 4.43%, extending its year-to-date gains. Weekly jobless claims edged higher, and a downward revision to Q4 2025 GDP growth stoked stagflation fears—slowing growth amid potential renewed inflation pressure. Expectations for Fed rate cuts this year have largely vanished. The European Central Bank also warned that strong action may be necessary if energy-driven price shocks persist, adding to global rate-hike pressures.

By sector, technology stocks bore the brunt of the sell-off. In the wake of a jury verdict holding Instagram and YouTube responsible for “social media addiction,” Meta plunged 8% and Alphabet slid over 3%. Market participants cited not just the direct financial liability but the hit to valuations from the risk of similar lawsuits and tighter regulations. Separately, Commercial Metals—an industrial and steel producer—tumbled over 4% after missing earnings expectations, underscoring concerns about a slowdown in the real economy.

Three main themes drove the market decline: first, a spike in oil prices and renewed inflation fears sparked by Hormuz-related risks; second, reinforced expectations that major central banks—including the Fed and ECB—will maintain higher interest rates for longer; and third, expanding legal risks for Big Tech. In the near term, volatility is likely to remain elevated, making it crucial for investors to reassess allocations to energy and defensive sectors and selectively trim overvalued growth names and stocks exposed to regulatory risks.