Stock market today: S&P 500 falls as Israel-Iran conflict intensifies

Investing.com--The S&P 500 fell Friday, as geopolitical tensions in the Middle East jump after Iran retaliated against Israel, pushing oil prices sharply higher and threatening global growth as well as faster inflation. 

At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average slid 769 points, or 1.8%, the S&P 500 index fell 1.2%, and the NASDAQ Composite fell 1.3%.

Geopolitical risks as Iran retaliates

Iran fired hundreds of missiles into Israel in retaliation for the latter’s attacks on Tehran’s nuclear and military. Israel vowed to strike back, stoking fears that conflict, which risks a wider regional skirmish, is set to intensify.   Israel carried out a military strike on Iran, hitting “dozens” of military and nuclear targets in what has been described as the largest attack on the Islamic Republic since the Iran-Iraq war of the 1980s.

The move came just days before U.S. and Iranian officials were set to attend a sixth round of nuclear deal talks.

Trump urged Iran to agree to a fresh nuclear deal in the wake of the Israeli strike, suggesting that the "next already planned attacks" could be "even more brutal."

Writing in a post on Truth Social, the president said Tehran must be ready to make a deal "before there is nothing left."

"No more death, no more destruction, JUST DO IT, BEFORE IT IS TOO LATE," Trump wrote, adding that he had previously told Iranian officials "in the strongest of words" to agree to a deal.

The White House had earlier warned it would consider military measures should nuclear negotiations fail, with a key response deadline ending Thursday. 

Iran responded by launching more than 100 drones toward Israeli territory, an Israeli military spokesman said. Sirens and a state of emergency were declared across Israel amid warnings of an imminent missile and drone counter‑strike from Tehran.

The prospect of escalating tensions in the Middle East -- a critical hub for oil production -- added to uncertainty for investors already grappling with heightened trade tensions that some fear could dent global growth.

Michigan consumer sentiment due

The University of Michigan’s consumer sentiment report rebounded in June to a reading of 60.5 in the first two weeks of June from a reading of 52.2 in May, according preliminary results released Friday.

“Consumers appear to have settled somewhat from the shock of the extremely high tariffs announced in April and the policy volatility seen in the weeks that followed,” said Joanne Hsu, director of consumer surveys at the University of Michigan.

The May producer price index came in cooler than expected on Thursday, restrained by lower costs for services like air fares, matching the consumer price index release the prior day, suggesting the impact of Trump’s tariffs have yet to be fully felt. 

On the note, Trump warned on Thursday that he could raise auto tariffs soon, stoking fresh angst over trade just a day after claiming that the U.S.-China trade deal was "done."

The president also said he will send letters to major U.S. trading partners in the next two weeks outlining his planned trade tariffs, ahead of a July 9 deadline to strike trade deals with his administration.

Airline stocks sink on rising fuel concerns, but defense stocks shine; Adobe raises annual guidance

Delta Air Lines (NYSE:DAL), United Airlines (NASDAQ:UAL), Southwest Airlines (NYSE:LUV) and American Airlines (BMV:AAL) all dropped sharply as the surge in crude prices raised concerns about higher fuel costs for the carriers, while defense companies Lockheed Martin Corporation (NYSE:LMT), Rtx Corp (NYSE:RTX), Northrop Grumman (NYSE:NOC) and L3Harris Technologies (NYSE:LHX) all gained on the heightened.  geopolitical tensions.

Defence stocks, however, were on the front foot as investors bet that a prolonged could bolster orders for military assets, with Lockheed Martin Corporation (NYSE:LMT) and Rtx Corp (NYSE:RTX), and Northrop Grumman Corporation (NYSE:NOC) among the biggest gainers.  

Elsewhere, Adobe (NASDAQ:ADBE) stock slipped despite raising its annual guidance, while Apple (NASDAQ:AAPL) edges higher after its iPhone sales rose to the top spot in China in May, with global sales growing 15% year-on-year during April and May in the tech giant’s strongest performance for the two-month period since the COVID-19 pandemic, data from Counterpoint Research showed.

Energy stocks ride crude surge higher on Israel-Iran conflict

Energy stocks including Halliburton Company (NYSE:HAL), APA Corporation (NASDAQ:APA), EOG Resources Inc (NYSE:EOG) led the sector to a more than 1% gain, underpinned by surging oil prices in the wake of Iran response to Israel’s large‑scale airstrike on Tehran Friday.

Israel said it intended to carry out more strikes to roll back Iran’s military capabilities as well as its ability to advanced its nuclear program, which Tel Aviv sees as a threat to its own existence. Iran has warned that Israel will pay heavy price for its attack, stoking fears of oil supply disruption in the region.   

Peter Nurse, Ayushman Ojha contributed to this article