US Equity Indexes Slump as Iran War Sends Crude Oil, Treasury Yields Sharply Higher

01:28 PM EST, 03/05/2026 (MT Newswires) -- US equity indexes declined in midday trading on Thursday as an escalating war in the Middle East sent crude oil prices and government bond yields sharply higher.

The Nasdaq Composite fell 1.2% to 22,525.3, with the Dow Jones Industrial Average down 1.3% to 47,783.5 and the S&P 500 lower by 1.3% to 6,777.6.

European nations are reluctantly being drawn into the Iran conflict, sending military support to protect the interests of allies but maintaining a defensive posture amid further signs of the war spilling beyond the Middle East, CNN reported.

West Texas Intermediate crude oil futures soared 6.5% to $79.48 a barrel.

Iran's "initial response to the US-Israeli attack, with missiles raining cats and dogs, is what is pushing oil and gas prices, freight rates, and shipping insurance premiums higher," PVM Oil Associates said in a note.

Iranian forces have struck oil tankers in or near the Strait of Hormuz, with the United Kingdom Maritime Trade Operations reporting explosions near a tanker off Kuwait overnight Wednesday, according to Reuters.

A crude oil supply disruption has prompted China to halt exports of refined products, while Japan's refiners have asked their government to tap strategic oil reserves, Bloomberg reported. An Indian refinery has also shut its crude unit due to a lack of supply. Qatar, the biggest liquefied natural gas producer in the Gulf, declared force majeure on gas exports on Wednesday.

US Treasury yields rose, with the two-year up 4.6 basis points to 3.59%. The 10-year yield jumped 5.6 basis points to 4.14%.

The ICE US Dollar Index, which measures the strength of the greenback against a basket of the world's major currencies, advanced 0.5% to 99.22.

The CBOE Volatility Index, also known as the fear gauge, surged 13% to 23.86.

In company news, Trade Desk (TTD) and Microsoft-backed (MSFT) OpenAI had early discussions to form a collaboration to support ad sales, The Information reported Wednesday, citing three unnamed sources familiar with the talks. Shares of Trade Desk (TTD) surged 19%, the top gainer on the S&P 500.

In economic news, US job cuts fell in February following a surge at the start of the year, but downsizing plans could pick back up due to the US-Iran war, Challenger Gray & Christmas said Thursday. Employers announced 48,307 layoffs last month, down 72% year-over-year and 55% from January, according to the outplacement and executive coaching firm.

"February's dip is a nice reprieve from the elevated job cut plans to start the year," Andy Challenger, the firm's chief revenue officer, said in a statement. "With US involvement in a growing war in Iran, the end of (the first quarter) may bring more layoff plans as companies tighten belts amid uncertainty and higher costs."

US initial jobless claims remained at 213,000 in the week ended Feb. 28 after a small upward revision in the previous week, compared with expectations for 215,000 in a survey of analysts compiled by Bloomberg. The four-week moving average fell by 4,750 to 215,750.

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