Investors Grow Wary as Iran War Drags On

Stocks slide amid concerns over higher oil prices and interest rates

Mar. 28, 2026 at 10:05am

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Investors have grown increasingly impatient with the ongoing war in Iran, as the conflict continues to drive up oil prices and interest rates, weighing on the broader market. The S&P 500 is on track for its worst monthly performance since March 2025, with the tech-heavy Nasdaq Composite and smaller Russell 2000 indexes also falling sharply.

Why it matters

The war in Iran is having a significant impact on the global economy, with rising energy costs and higher interest rates posing a threat to corporate profits and consumer spending. Investors are growing concerned that the conflict could lead to a prolonged period of economic uncertainty and market volatility.

The details

The S&P 500 has fallen for five straight weeks, with the index now 6% below its last record high set in January. The tech-heavy Nasdaq Composite has fallen into correction territory, defined as a decline of more than 10% from a recent high. The Russell 2000 index of smaller companies has also fallen nearly 9%, briefly dipping into correction territory. Every sector of the S&P 500 is in the red since the war began, except for the energy sector, which has benefited from higher oil prices.

  • The war in Iran began on February 28, 2026.
  • The S&P 500 is on track for its worst monthly performance since March 2025.
  • The 10-year Treasury yield has surged more than half a percentage point since the war began, to around 4.5%.
  • The average 30-year mortgage rate in the U.S. has risen sharply this month to around 6.5%.

The players

Cindy Beaulieu

Chief investment officer for North America at the investment manager Conning.

Stuart Kaiser

Equity strategist at Citigroup.

President Donald Trump

The U.S. president, whose sensitivity to the market was on display when he extended the deadline for Iran to open the Strait of Hormuz.

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What they’re saying

“We still have this underlying theme in the market that if investors take a thought or fear too far, they are going to miss out on the recovery when the market goes higher.”

— Cindy Beaulieu, Chief investment officer for North America at the investment manager Conning

“For trading desks, it has been a really unpleasant time. It's death by a thousand cuts.”

— Stuart Kaiser, Equity strategist at Citigroup

What’s next

Investors will be closely watching for any signs of de-escalation in the conflict, as well as the Federal Reserve's response to the war's inflationary impact. The administration's continued messaging on the conflict will also be a key factor in determining the market's direction.

The takeaway

The war in Iran has become a significant headwind for the U.S. and global economy, with rising energy costs and interest rates posing a threat to corporate profits and consumer spending. Investors are growing increasingly impatient with the conflict's prolonged impact, and a resolution to the crisis could be crucial for restoring market confidence.