Dow Tumbles Over 500 Points As Iran War Stokes Fears Of Further Selloff In US Stocks This Year

• Ed Yardeni raised the odds of a sharp selloff in U.S. stocks in 2026 to 35%, up from 20%, according to a Bloomberg report.
• The veteran strategist said that if the oil shock persists, the Federal Reserve’s dual mandate would be stuck between the increasing risk of higher inflation and rising unemployment.
• Meanwhile, JPMorgan analysts said they are now “tactically bearish” on the U.S. market, citing a lack of extreme de-risking.

U.S. equities declined on Monday morning amid concerns that the Iran war could widen further, with the Dow Jones Industrial Average tumbling over 500 points and the S&P 500 index falling 1% after the opening bell.

The intensifying tensions in the Middle East resulted in a sharp rise in crude oil prices. U.S. West Texas Intermediate (WTI) crude futures maturing in April soared to a new 52-week high of $119.43 a barrel before cooling down slightly to hover at $100 at the time of writing.

Brent crude futures expiring in May also rose to a new 52-week high of $119.46 a barrel before losing some steam to hover at $102.2.

The CNN Fear and Greed Index was hovering in the ‘Extreme Fear’ zone at 25.

Yardeni Expects A Sharp Selloff In US Stocks This Year

Ed Yardeni increased the odds of a sharp selloff in U.S. stocks in 2026 to 35%, up from 20%, according to a Bloomberg report citing the latest note from the veteran strategist.

“The US economy and stock market are stuck between Iran and a hard place currently. So is the Fed. If the oil shock persists, the Fed’s dual mandate would be stuck between the increasing risk of higher inflation and rising unemployment,” Yardeni stated in his note.

Meanwhile, JPMorgan analysts said they are now “tactically bearish” on the U.S. market, according to a report by CNBC.

“There has been a lack of extreme de-risking with positioning currently neutral. Further, Energy was the most net-sold sector last week as investors took profits into the weekend where, presumably, they were expecting de-escalation,” the firm stated.

However, not everyone is as fearful, with analysts at Morgan Stanley stating that the U.S. markets are closer to the end of the rolling correction. The firm stated in its recent note that it remains constructive over the next six to 12 months, according to the report.

“The pace of increases in oil and the dollar will determine how long volatility persists. U.S. equities are in a favorable position versus international markets,” the firm said.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 1.18%; the Invesco QQQ Trust ETF (QQQ) fell 1.04%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 1.24%. Retail sentiment on Stocktwits regarding the S&P 500 ETF was in the ‘bearish’ territory.

The United States Oil Fund ETF (USO) was up 9.6%, while the ProShares Ultra Bloomberg Crude Oil ETF (UCO) was up 9.4% at the time of writing.

Also See: HIMS Stock Soars After Novo Nordisk Drops Patent Infringement Lawsuit, Opens Access To Ozempic, Wegovy

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