Wall Street closed sharply lower on Thursday amid escalating geopolitical tensions tied to the U.S. - Iran conflict, including reports of tanker attacks and widening military strikes across the region. The S&P 500 fell 1.07% to close at 6,795.97, while the Dow Jones Industrial Average dropped 1.92%, or 936 points, to 47,802.94. The Nasdaq Composite declined 0.92% to 22,597.08 as broader risk-off positioning spread across sectors. European markets also weakened, with the FTSE 100 down 1.45% and Germany’s DAX falling 1.27%.

Asian markets reflected mixed sentiment earlier in the session as regional investors assessed energy disruptions tied to shipping risks in the Persian Gulf. Recent attacks on tankers and oil infrastructure have intensified fears of supply disruptions in the Strait of Hormuz, which normally carries roughly one-fifth of global oil shipments.

Equities extended losses as the conflict widened and reports emerged of disrupted shipping routes through the Strait of Hormuz. The VIX volatility index climbed 18.25% to 25.01, signaling a rapid increase in market uncertainty. Sector performance diverged sharply.

Energy stocks advanced 4.06% following the surge in crude prices, while financials and technology declined 1.58% and 0.89% respectively. Small-cap stocks lagged the broader market, with the Russell 2000 falling 2.60% to 2,567.58, widening the gap between large-cap and small-cap performance as investors reduced exposure to higher-risk segments.

Bond yields moved higher as markets evaluated inflation risks tied to rising energy costs. The 10-year U.S. Treasury yield increased 5 basis points to 4.13%, marking its highest level in roughly a month. The 2-year Treasury yield climbed 3 basis points to 3.62%, deepening the yield-curve inversion to approximately 51 basis points.

Corporate bond spreads widened modestly, rising 4 basis points to 98 basis points over Treasuries, indicating mild credit repricing amid heightened geopolitical volatility.

The U.S. dollar strengthened modestly against major peers during the session. The Dollar Index (DXY) rose 0.46% to 99.23 as investors rotated toward safe-haven assets. USD/JPY advanced 0.48% to 155.90, while EUR/USD declined 0.45% to 1.172. Emerging-market currencies faced pressure, weakening roughly 0.3% against the dollar, with particular softness seen in currencies tied to commodity-importing economies.

Commodities moved higher as energy supply fears intensified. Brent crude rose 3.86% to $84.54 per barrel, while West Texas Intermediate gained 6.58% to $79.57 per barrel. Oil prices have climbed steadily as tanker traffic slowed sharply through the Strait of Hormuz and regional infrastructure attacks increased supply concerns.

Gold declined 1.35% to $5,070.90 per ounce as higher Treasury yields reduced demand for non-yielding assets. Silver fell 1.95% to $81.49, while natural gas gained 2.3% to $3.52 per MMBtu amid broader energy-sector volatility.

Economic data remained resilient despite the geopolitical backdrop. ADP private payrolls increased by 190,000 in February, exceeding expectations of 150,000. Initial jobless claims held at 212,000, slightly below consensus forecasts. Fourth-quarter productivity rose 2.8%, with unit labor costs also increasing 2.8%. The ISM Services PMI registered 52.7, above expectations of 51.5 and indicating continued expansion in the services sector. Challenger job cuts declined to 48,310 from prior readings.

Geopolitical developments continued to dominate market sentiment. Iran has vowed retaliation following U.S. and Israeli strikes, and attacks on oil facilities and shipping routes have raised concerns about supply disruptions across the Middle East. These developments have amplified volatility across global energy and financial markets as investors evaluate potential inflation effects tied to rising oil prices. Bitcoin declined 1.2% to approximately $65,200, broadly aligning with the retreat in risk assets.

Key reference levels for March 6 open:

Markets enter Friday’s session with higher Treasury yields, a firmer dollar, elevated volatility, and strong commodity prices pointing to continued uncertainty.