US equities fell sharply on Monday, testing their lowest levels of the year as escalating conflict in the Middle East and a resulting surge in energy prices prompted a global shift away from risk assets. The S&P 500 and the Nasdaq 100 each declined more than 0.5%, with the Nasdaq 100 at one point down 1%. The United States carried out a strike on Iran that killed its supreme leader, prompting retaliatory attacks by Iran on multiple targets across the region.
Equity markets worldwide weakened as the prospect of a prolonged conflict weighed on risk appetite. The accompanying spike in energy prices raised concerns over renewed upward pressure on inflation expectations, increasing the likelihood of tighter monetary policy from the Federal Reserve and other major central banks.
Losses in US stocks were broad-based across most major sectors. Mega-cap technology names came under pressure, with Amazon and Apple each declining more than 1%. Financials also traded lower, as JPMorgan and Bank of America fell about 2% apiece amid mounting concerns over private credit exposures and recent defaults by major clients. In contrast, North American energy producers rallied sharply, benefiting from the move higher in crude prices.
