Just now! Israel launches a large-scale airstrike! Crude oil surges, and U.S. stocks plummet across the board!

Tensions in the Middle East continue to escalate, and volatility in global financial markets has intensified.

Overnight, U.S. stocks fell across the board, with all three major indexes dropping more than 1%. Large-cap tech stocks broadly declined. International oil prices surged sharply. As of the close on the day, both WTI crude oil futures and Brent crude oil futures rose by more than 9%. Some analysts said the escalation of the conflict in the Middle East triggered a sell-off wave in the U.S. stock market, with investors worrying that the timeline for resolving the Middle East conflict could be delayed even further. In addition, as oil prices have continued to skyrocket, the market is increasingly realizing that the likelihood of the Federal Reserve cutting rates later this year is rapidly falling.

On the developments front, according to CCTV News, on the evening of March 12 local time, the Israel Defense Forces announced that it had begun large-scale attacks on infrastructure in Tehran, the Iranian capital. The U.S. Central Command said on March 12 local time that a U.S. KC-135 aerial refueling aircraft crashed in western Iraq. The incident occurred during a period when the U.S. and Israel launched military strikes against Iran. U.S. Central Command said the incident was not caused by enemy fire or a friendly misfire.

U.S. stocks fall across the board

On March 12, U.S. Eastern Time, all three major U.S. stock indexes fell across the board. The Dow dropped more than 739 points, a decline of 1.56%; the Nasdaq fell 1.78%; the S&P 500 index fell 1.52%. With the exception of the energy sector and some defensive stocks, all other sectors were hit by heavy sell-offs.

Large-cap U.S. technology stocks broadly declined. Tesla dropped more than 3%, Meta fell more than 2%, and Nvidia, Apple, Amazon, and Google dropped more than 1%. Microsoft ended slightly lower.

Most popular China concept stocks fell. The Nasdaq Golden Dragon China Index closed down 1.03%. Pony.ai fell 4.7%, Li Auto fell more than 2%, and Alibaba and PDD Holdings fell more than 1%. NIO rose more than 1%, XPeng Motors rose more than 3%, and FangduoDuo surged more than 16%.

On the news front, the first statement made by Iran’s newly appointed top leader earlier, which dashed hopes that the war could be quickly de-escalated, pushed crude oil prices soaring to nearly $100 per barrel. This heightened market concerns about inflation and prompted investors to sell off stock assets aggressively.

Carson Group’s chief market strategist Ryan Detrick said the market has already realized that the timeline for resolving the Middle East conflict may be delayed further. Now the market sentiment is to sell first and worry about fundamentals later. Aside from the energy sector, there are hardly any truly safe sectors.

Crude oil prices surged again sharply. As of the close on the day, the light sweet crude oil futures contract for April delivery on the New York Mercantile Exchange jumped 9.72% to $95.73 per barrel; the Brent crude oil futures contract for May delivery on the London ICE rose 9.22% to $100.46 per barrel.

On the day, Iran’s newly appointed supreme leader Mujtaba Khamenei said Iran will continue to adopt strategic measures including blocking the Strait of Hormuz, while also launching attacks on U.S. military bases in the Middle East.

At the same time, the International Energy Agency (IEA) warned that the Iran war is causing the largest-scale oil supply disruption in history, further intensifying concerns about inflationary pressure rising.

Because shipping volumes through the Strait of Hormuz have plunged from around 20 million barrels per day before the conflict to nearly a standstill, and with limited rerouting capacity and inventories continuing to increase, oil production in Gulf countries has been reduced by at least 10 million barrels per day. If shipping cannot be restored quickly, supply losses may expand even further.

On Thursday, White House press secretary Karoline Leavitt said the Trump administration is considering a temporary exemption from implementing the century-old Jones Act to ensure energy and agricultural products can be freely transported between U.S. ports.

It is understood that the announcement regarding a 30-day Jones Act exemption period may be released as early as Thursday, with the goal of addressing the surge in fuel prices and other supply disruption issues that have emerged since the U.S. and Israel began war against Iran.

Trump: The rate cuts should happen immediately

On March 12, U.S. Eastern Time, U.S. President Donald Trump again called for the Federal Reserve chair Jerome Powell to cut rates, saying that under global economic shocks caused by the conflict with Iran, the Federal Reserve should take action immediately.

Trump wrote on social media: “Where is today’s Powell, who is always too late? He should cut rates immediately, not wait until the next meeting!”

The Federal Reserve will hold a meeting on monetary policy on March 17. Although recent U.S. inflation data shows that price growth is generally still within manageable limits, tensions in the Middle East have pushed up oil prices significantly and threatened global supply chains. Rising dissatisfaction among Americans with the cost of living is not favorable for the Republican Party’s prospects of maintaining control of Congress in the November midterm elections.

The market broadly expects the Federal Reserve to keep the benchmark interest rate unchanged, but its latest released Summary of Economic Projections (SEP) will be closely watched, as investors will look for signals on whether inflation expectations will be raised.

Under the surface of surging oil prices, the market is realizing: the likelihood of Fed rate cuts later this year is rapidly declining.

For now, traders have already sharply reduced their bets on rate cuts this year. Traders no longer believe the probability of the Federal Reserve cutting rates once in 2026 is 100%. Interest rate swaps linked to Federal Reserve policy meeting dates show that on Thursday, traders only expected a 24-basis-point rate cut this year, whereas in trades later on Wednesday, expectations were about 30 basis points—equivalent to a rate-cut magnitude of less than 0.25 basis points.

On the developments front, according to CCTV News, on the evening of March 12 local time, the Israel Defense Forces announced that it had begun large-scale attacks on infrastructure in Tehran, the Iranian capital. Around 22:10 on March 12 Tehran time, a CCTV reporter heard explosions in Tehran, and the air defense system was activated.

On the evening of the 12th, after Israeli Prime Minister Benjamin Netanyahu held his first press conference since launching a large-scale airstrike on Iran, he used the occasion to defend the military strikes jointly carried out with the United States against Iran.

Netanyahu said that after nearly two weeks of U.S.-Israel airstrikes, Iran is “no longer what it used to be,” and Iran’s Islamic Revolutionary Guard Corps and Basij militia forces “have all been severely dealt a blow.”

When asked what actions Israel might take against Mujtaba Khamenei and against the leader of Hezbollah in Lebanon, Naim Qassem, Netanyahu claimed he would not “issue them life insurance policies,” and said he “does not intend to explain the plans here in detail or the actions that will be taken.”

Netanyahu also revealed that he speaks with Trump “every day,” and that their communication is “candid and open.”