Stocks Waver in Choppy Trading as War Drags On: Markets Wrap
(Bloomberg) — Stocks fluctuated as traders grappled with a range of possible outcomes for the war in the Middle East, with oil prices remaining elevated as fighting continued after US President Donald Trump pushed for talks.
S&P 500 contracts were 0.2% lower after swinging between gains and losses. European stocks dropped 0.1%. Treasuries dipped, with the two-year yield climbing two basis points to 3.88%. Brent crude stayed above $100 a barrel. The dollar gained 0.2% while gold edged 0.3% higher.
Traders continue to juggle headlines around the US-Israeli war against Iran after Trump signaled a possible end to hostilities on Monday following what he described as productive talks. The positive sentiment from those comments faded after Iran denied substantive discussions, while the Wall Street Journal reported that US allies in the Persian Gulf may join the campaign against Tehran.
“It’s a very tricky situation,” said Arnaud Girod, head of cross-asset strategy at Kepler Cheuvreux. “If there’s a deal in five days then there’s a chance the market can bounce back and investors may be able to look through the crisis but if there’s not, a recession is a possibility. The range of outcomes is very large still, which explains the volatility.”
Renewed tensions risk keeping oil prices elevated, potentially stoking inflation and reinforcing expectations that policymakers may delay easing or even tighten monetary policy. Investors are concerned the war will have lasting effects on economic growth and prices, even if hostilities end soon.
“Yes, markets can rebound if talks succeed but even in that case we’re expecting volatility to remain,” said Claudia Panseri, chief investment officer at UBS Wealth Management, who is “as defensive as possible” in Europe and cutting exposure to cyclical stocks like banks. “Oil reserves must be replenished, supply bottlenecks tackled, so things will not go back to where they were prior to the strikes. That means that there would still be an impact on growth and inflation.”
Iran launched overnight missile and drone attacks on the Israeli cities of Eilat, Dimona and Tel Aviv, as well as US bases in the Middle East. Saudi Arabia said it intercepted a drone in its eastern region, and Kuwait said some power lines were put out of service after an Iranian attack. Sirens sounded in Bahrain.
In Iran, the Fars news agency reported US-Israeli attacks that damaged a gas pressure-regulation plant and an administrative building in the central city of Isfahan. There was also a strike on a pipeline supplying gas to the Khorramshahr Combined Cycle Power Plant in southwestern Iran, according to Fars.
Markets remain on “hyper alert” for the next development, said Anna Wu, a cross asset strategist at Van Eck Associates Corp.
“Most investors are still waiting for some sort of talk to be confirmed between Iran and the US for clarity,” she said.
Corporate News:
Estée Lauder Cos. said it’s in talks to buy Puig Brands SA in a deal that would create a cosmetics giant with about $20 billion in annual sales. Revolut Ltd.’s revenue surged 46% last year as it boosted subscriptions from a rising number of customers and increased its wealth offerings. Apollo Global Management Inc. is curbing redemptions from one of its largest non-traded private credit funds for retail investors, becoming the latest alternative asset manager to grapple with a surge in such requests. Sumitomo Mitsui Financial Group Inc. is working on plans for a potential takeover of Jefferies Financial Group Inc., according to the Financial Times. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.2% as of 6:33 a.m. New York time Nasdaq 100 futures were little changed Futures on the Dow Jones Industrial Average fell 0.2% The Stoxx Europe 600 was little changed The MSCI World Index rose 0.1% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.2% to $1.1587 The British pound fell 0.3% to $1.3395 The Japanese yen fell 0.2% to 158.75 per dollar Cryptocurrencies
Bitcoin rose 0.3% to $71,100.73 Ether fell 0.2% to $2,157.09 Bonds
The yield on 10-year Treasuries advanced three basis points to 4.37% Germany’s 10-year yield was little changed at 3.01% Britain’s 10-year yield was little changed at 4.92% Commodities
West Texas Intermediate crude rose 2.3% to $90.19 a barrel Spot gold rose 0.2% to $4,417.52 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Anand Krishnamoorthy and Neil Campling.
©2026 Bloomberg L.P.
