Key Points
The Dow turned negative for the year on March 5.
Soaring oil prices are taking a toll on the Dow's 30 stocks.
Even if the war ends soon, oil prices could remain volatile.
The price of oil has continued to rise in recent days, pushing stock indexes like the Dow Jones Industrial Average lower. As I write this at Wednesday's market close, Brent crude, the international benchmark, is trading at about $93 a barrel, more than $20 higher than its price before the war in Iran began.
As a result of spiking energy prices, the Dow turned negative for the year on March 5 and has continued to fall. It's down about 4.5% since the Iran war began and 1.3% in the red for 2026. It shed 289 points on Wednesday.
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The Dow, one of the most widely quoted stock indexes in the world and one of the oldest (dating to 1896), tracks 30 of the largest U.S. companies and is considered to be a useful indicator of the health of the entire U.S. stock market. Analysts say that spiking crude oil prices will weigh on long-established U.S. companies first -- like those tracked by the Dow -- and then spread to other parts of the stock market.
It's not yet clear what can halt the slide in stock indexes. Certainly, a ceasefire or a surrender by the Iranian regime would help, though neither looks likely anytime soon. President Donald Trump, clearly worried about the market's reaction to the ongoing conflict, continues to assert the conflict will end "very soon."
Yet, it's telling that Trump's assurances about a near-term end of the war come amid mixed messages on the timeline from both Defense Secretary Pete Hegseth and Secretary of State Marco Rubio.
An end to the war may not bring an end to market volatility
Even if the war does end soon, there's no guarantee that oil will retreat to its pre-war price or that volatility in energy markets will abate. That's because a peaceful transition to a new regime in Iran is not the most likely post-war scenario, analysts say. More likely is a chaotic environment with various groups fighting to fill the power vacuum, possibly coupled with infighting between Iran's various ethnic groups.
J.P. Morgan notes in a recent report that since 1979, the year of the Iranian revolution, there have been eight notable instances of regime change in medium- to large-scale oil-producing nations, each with significant implications for global oil prices and supply dynamics. And further destabilization of Iran could lead to significantly higher oil prices sustained over extended periods, and thus more volatility, the investment bank says.
That means indexes like the Dow and the S&P 500 may continue to whipsaw up and down even after the bombing has ended and the Strait of Hormuz is once again passable.
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