Technology stocks weighed on U.S. equity markets as ongoing conflict involving Iran drove oil prices higher, fueling concerns about inflation. The S&P 500 fell 1.5%, closing lower for the third straight session. The NYSE FANG+ Index dropped 1.9%, nearing a 10% decline from its October peak.

The conflict with Iran entered its 13th day, with both U.S. President Donald Trump and Iran’s new Supreme Leader taking firm stances. Trump emphasized that preventing Iran from obtaining nuclear weapons and curbing its regional influence outweighed concerns over rising oil costs. Iran’s new leader, Mujtaba Khamenei, indicated efforts to keep the Strait of Hormuz effectively closed.

José Torres, senior economist at Interactive Brokers, noted that Khamenei’s comments posed a significant obstacle for investors hoping for a swift resolution. Dec Mullarkey, managing director at SLC Management, observed little indication that either side was prepared to compromise. He suggested that if shipping disruptions persist through March, oil prices could reach record highs.

Rising oil prices have heightened inflation expectations, leading bond traders to reassess the likelihood of a Federal Reserve rate cut in 2026, which is no longer fully priced in. Traders are also monitoring trade developments, as the U.S. government initiated its first comprehensive trade investigations, potentially paving the way for new tariffs.

Concerns over private credit continue to pressure alternative asset managers and major banks. Morgan Stanley has restricted redemptions for one of its private credit funds.

At market close, the S&P 500 stood at 6,672.62, down 1.5%. The Dow Jones Industrial Average fell 1.6% to 46,677.85. The Nasdaq Composite declined 1.8% to 22,311.98, while the Nasdaq 100 dropped 1.7% to 24,533.58. The Russell 2000 index fell 2.1% to 2,488.99.