Which Stocks Are Most Affected by the War in the Middle East?

Geopolitical tremors ripple through global markets—and Wall Street's always first to feel the shake. Forget the usual suspects; this conflict hits sectors you might not expect.

Energy's Obvious Play—And Its Hidden Costs

Oil giants spike on supply fears, but that's surface-level analysis. The real volatility? Shipping lanes reroute, insurance premiums skyrocket, and regional supply chains snap. Companies with heavy exposure to Middle Eastern logistics are recalculating their entire quarterly forecasts overnight.

Defense Stocks: The Perennial 'Winners'

Arms manufacturers see orders climb—a grim, reliable market axiom. Yet, increased scrutiny on military exports and potential contract delays create a complex battlefield for investors. It's not just about demand; it's about navigating a political minefield to get paid.

The Tech and Finance Domino Effect

Global instability sends investors scrambling for 'safe havens,' often bypassing traditional equities. This capital flight pressures tech valuations and tightens credit. Firms reliant on international financing or consumer spending in the region face sudden headwinds—a reminder that in today's economy, a conflict zone can crash a boardroom meeting 5,000 miles away.

So, which stocks get hit hardest? Look beyond the ticker tape to the intricate web of global trade. The most affected companies are often those whose risk models never priced in a war—a classic case of Wall Street planning for the last crisis, not the next one.

Key Takeaways

• Worries about developments in Iran rattled financial markets Monday, after the U.S. and Israel launched a joint attack over the weekend.
• The major U.S. equities indexes lost ground, with travel-related stocks leading losses, while defense and oil industry stocks gained.

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Worries about developments in Iran are rattling financial markets Monday.

Early Saturday, the U.S. and Israel launched a joint attack on Iran, which retaliated against Israel and U.S. interests in several countries across the Middle East. Yesterday, President Donald TRUMP said the U.S. plans to continue its combat operations in Iran for several more weeks, raising concerns about a protracted conflict.

The major U.S. equities indexes slid Monday, with the Dow Jones Industrial Average, S&P 500, and Nasdaq 100 down about 0.4%, 0.3%, and 0.2%, respectively.

Travel-related stocks led declines on the S&P 500, while shares of American defense contractors were among the top performers. Oil and gas producers also saw shares surge along with prices of the commodities.

How This Impacts Investors' Portfolios

Investors tend to favor traditional "safe haven" assets such as gold, along with shares of defense, energy, and other security-linked sectors in the face of geopolitical conflicts.

Major Airline Shares Lose Altitude

Global airline stocks dropped Monday as numerous carriers' operations in the Middle East shut down following U.S. and Israeli bombings of Iran and Iran's retaliatory strikes. Shares of U.S. carriers Delta Air Lines (DAL), United Airlines Holdings (UAL), and American Airlines Group (AAL) dropped between 3% to 5% in recent trading.

Cruise Operators and Other Travel Stocks Slide

Norwegian Cruise Line Holdings (NCLH) was among the leading decliners in the S&P 500, with shares down nearly 10%. Rival Carnival (CCL) plunged 8%, and Royal Caribbean Group (RCL) slid 4%. Other travel-related stocks, including Booking Holdings (BKNG) and major hotel chains Marriott International (MAR) and Hilton Worldwide (HLT), also lost ground.

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Makers of Weaponry and Defense Technology Gain

Data analytics software provider Palantir (PLTR), which counts the U.S. government as a major client, saw its shares soar 6% in recent trading, making it the best-performing stock in the S&P 500 Monday. Defense contractors Lockheed Martin (LMT), RTX (RTX), and Northrop Grumman (NOC) also surged.

Energy Stocks Follow Oil and Gas Prices Higher

West Texas Intermediate crude and natural gas prices jumped about 6% and 4%, respectively, lifting shares of major energy companies. Shares of oil giants ConocoPhillips (COP), ExxonMobil (XOM), Chevron (CVX), Occidental Petroleum (OXY), and Phillips 66 (PSX) all climbed. LNG suppliers Venture Global (VG) and Cheniere Energy (LNG) soared 17% and 7%, respectively.

Read Investopedia's full coverage of Monday's trading here.