NASDAQ Index, SP500, Dow Jones Forecasts – Stocks Dive As Traders Worry That U.S. Plans A Ground Operation In Iran

According to CBS, U.S. is actively preparing for a ground operation, which would be a huge escalation of the conflict. Axios reported that U.S. was thinking about occupying the Kharg Island, which plays a key role in Iranian oil exports.

Meanwhile, Iranian officials noted that they would not negotiate on the Strait of Hormuz when the country was under attack. All recent reports show that neither U.S. nor Israel plan to stop the military operation against Iran.

Not surprisingly, oil prices rallied as traders focused on the risks of a ground operation in Iran. WTI oil climbed above the $98.00 level, while Brent oil soared towards the $113.00 level.

From a big picture point of view, traders prepare for an additional escalation in the Middle East. Iran has previously said that it would destroy oil and gas assets in the Gulf in case its own facilities are attacked. Recent action indicates that Iran is not bluffing and would be ready to deal as much damage as possible.

High energy prices will put material pressure on the global economy. There is no end in sight for the Middle East war, and traders have started to evaluate worst-case scenarios.

The pullback was broad, and most market sectors moved lower in today’s trading session. Energy stocks managed to gain some ground but traders were cautious as high oil prices could ultimately hurt demand for energy.