US Stock Movement | Dow Drops Over 600 Points, Small-Cap Index Falls into Technical Correction Territory

Iran conflict escalation drives energy prices and inflation fears, pushing up bond yields in Europe and the US. The US stock market continued to be under pressure on Friday, with the Dow Jones Industrial Average dropping more than 600 points at one point in the late session, and the Nasdaq falling over 2.4%. The Russell 2000 index, which reflects small-cap stocks, has fallen more than 10% from recent highs, becoming the first major US stock benchmark to enter a technical correction zone in 2026.

Likely 50% chance of Fed rate hike in October

Traders have increased the probability of the Federal Reserve raising interest rates in October to 50%, reversing previous expectations of a rate cut. Investors now expect over a 50% chance that the European Central Bank will hike rates at its next meeting in April. The market also anticipates a 100% chance that the Bank of England will raise rates in June, with no expectation of rate cuts this year.

As of 3:37 a.m. local time, the Dow was at 45,418 points, down 602 points or 1.31%; the S&P 500 was at 6,479 points, down 127 points or 1.93%; the Nasdaq was at 21,557 points, down 533 points or 2.41%. Boeing’s stock plunged 3.9%, temporarily the worst performer among Dow components; Honeywell declined 3.6%, and Nvidia dropped 3.1%.

Although Israel signaled a temporary halt to attacks on Iran’s energy facilities, Iran continues to launch attacks in the Persian Gulf region. Meanwhile, according to Axios, citing four sources, the Trump administration is considering occupying or blockading Iran’s main oil export hub, Kharg Island, to pressure Iran and reopen the Strait of Hormuz.

Candriam investment director Nicolas Forest noted that the current market environment is quite fragile. With oil prices remaining high and rate hike risks increasing, if stocks fail to hold key technical support levels, it could signal further downward pressure.