US Stock Market Rises Amid Ongoing US-Iran Conflict

US Stock Market Poised for Modest Gains as Tensions in West Asia Continue

The US stock market is expected to open with modest gains on Monday, March 30, despite ongoing tensions in West Asia. Futures for the three key indices – the Dow Jones Industrial Average, S&P 500, and Nasdaq – were trading higher by around 0.3% at the start of the week.

However, the market is bracing for its biggest monthly drop in over three years, as higher crude oil prices have sparked fears of prolonged inflation and trimmed prospects of multiple US Federal Reserve rate cuts in 2026. The escalating conflict in the Middle East has entered its fifth week, surpassing US President Donald Trump's earlier prediction that the war would last four weeks.

Iran-backed Houthi militants in Yemen have further escalated the situation by launching a barrage of missiles on Israel over the weekend, which has kept crude oil prices marching higher and put them on track for a record monthly increase. The war's targets have expanded beyond energy facilities and military bases to residential areas, as the US, Israel, and Iran are launching attacks on key populated locations.

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President Donald Trump has stated that he wants to "take the oil in Iran" and could seize the export hub of Kharg Island, a primary oil export terminal for Iran that handles 85% to 95% of the country's total crude exports. Despite this, Tehran has again dismissed direct talks with the US and threatened to launch its own ground invasion of Gulf Arab countries and mine the Persian Gulf if US troops land on its territory.

The Nasdaq 100 and the Dow Jones Industrial Average have fallen into correction territory, with both indices down 10% from their recent highs. The S&P 500 is also moving towards the correction zone, as it is just 1% away from slipping 10% from its recent highs. US stocks have closed the last four straight weeks in the red, marking its longest losing streak since 2022 and are on track for the biggest monthly drop since September 2022, when it crashed 9.34%.

Despite initial resilience, US stocks have shown a sharp decline as the month-long war's economic costs have started to build up, along with a sharp sell-off in Treasuries and mounting recession fears. Crude prices have continued to build on the last week's gains, with Brent crude rising another 2% to reach an intraday high of $117 per barrel, as traders fear that supply disruptions will persist.

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Crude oil prices have remained elevated, as the Strait of Hormuz – through which roughly 20% of the world's oil supply passes – has effectively been shut since the US-Israel escalation against Iran in late February. Before the start of the war, Brent crude was around $70, indicating that prices have surged nearly 60% in a month, putting it on track for a record monthly increase.

Economists have warned that if crude oil prices remain at these elevated levels, it could hurt global growth and cripple many economies that are highly sensitive to crude price volatility.