U.S. stock markets experienced a steep decline Friday, driven by escalating tensions between Israel and Iran. Rising oil prices, fueled by the conflict’s impact on global energy security, triggered widespread investor risk aversion. The Dow Jones Industrial Average dropped 1.79%, while the S&P 500 and Nasdaq witnessed declines of 1.13% and 1.30% respectively. The escalating conflict saw Israel launching strikes against Iranian nuclear and missile facilities late Thursday evening, prompting retaliatory missile attacks from Iran as U.S. markets closed for the day. This dynamic impacted several sectors heavily. Oil and defense companies experienced notable gains with Brent crude surging more than 7%, and WTI crude approaching $74 per barrel. ExxonMobil saw a rise of about 2%, while Lockheed Martin and RTX, key defense firms, saw around 3% growth. Gold prices climbed 1.4% to reach nearly $3,432 an ounce, nearing its April record. Global markets were similarly affected with European and Asian equities losing over 1%. U.S. Treasury yields climbed, rising by 7.9 basis points to 4.436%, reflecting a shift away from safe-haven assets after earlier declines. The dollar also strengthened, gaining 0.5%. President Trump appealed to Iran to rejoin nuclear talks and warned of further consequences for the country, citing the missed 60-day deadline for negotiations. Meanwhile, Iran canceled planned negotiations with the U.S. Investors now face a renewed risk of inflation from rising oil prices and uncertainty surrounding future Federal Reserve actions. Despite this turbulent week, consumer sentiment remains strong according to the University of Michigan’s index which increased to 60.5 in June. This suggests that consumers are poised for resilience despite current geopolitical challenges.