Nasdaq Erases Losses in Dramatic Reversal

The Nasdaq staged a notable turnaround Monday after opening sharply lower, as investors reacted to U.S. and Israeli military strikes on Iran, CNBC reports.

The Nasdaq Composite climbed about 0.34% by midday after being down as much as 1.6% earlier in the session. The S&P 500 recovered from a drop of roughly 1.2% to break even, while the Dow Jones Industrial Average remained modestly lower, off by 63 points, or 0.13% down.

Technology shares helped lead the rebound, with heavyweight names trimming earlier losses and lifting broader indexes off their lows. Defense contractors and energy companies also advanced, providing additional support as geopolitical tensions fueled expectations of higher military spending and elevated oil prices.

Safe-haven assets moved higher as well. Gold rose around 1%, and the CBOE Volatility Index — often referred to as Wall Street’s fear gauge — surged to its highest level of the year.

Over the weekend, joint U.S.-Israeli strikes reportedly killed Iran’s Supreme Leader, marking a pivotal moment for the Islamic Republic and dramatically escalating tensions in the region.

Iranian officials vowed retaliation, stoking fears that the conflict could widen. Explosions were reported in major Gulf cities, intensifying investor anxiety about potential spillover effects.

Oil prices jumped more than 6%, though they retreated from session highs.

Traders remain focused on whether the situation could disrupt shipments through the Strait of Hormuz, a vital artery for global crude supplies. Any sustained interruption there could send energy prices sharply higher and complicate the inflation outlook.

Despite the volatility, some strategists cautioned against assuming the worst.

Analysts at Barclays noted that while the risk of a prolonged conflict has increased, it is too soon to determine whether the situation will significantly alter the U.S. economic trajectory. Others said markets appeared to stabilize as no immediate escalation beyond the initial strikes materialized.

The geopolitical shock adds to an already uneasy backdrop for equities. Stocks ended February on a weak note amid renewed turbulence in artificial intelligence and software shares, as investors debate whether rapid automation could disrupt business models and employment trends.

Meanwhile, fresh economic data showed U.S. manufacturing expanded in February, though input costs rose sharply, underscoring persistent inflation pressures.

By late morning, the Nasdaq had turned positive and the S&P 500 edged into slight gains — a sharp reversal from the steep losses seen shortly after the opening bell.