U.S. stock futures plunged on Tuesday night on news that rockets were fired at an Iraqi airbase that hosts American troops.
Dow Jones Industrial Average futures dropped 343 points and indicated a loss of 365 points at Wednesday’s open. S&P 500 and Nasdaq 100 futures pointed to losses of at least 1.3%. Dow futures briefly fell more than 400 points earlier.
U.S. military officials told NBC News the Al Asad airbase, which is located in western Iraq, has come under attack, with multiple projectiles hitting it.
The Pentagon later confirmed the report, saying in a statement: “Iran launched more than a dozen ballistic missiles against U.S. military and coalition forces in Iraq. It is clear that these missiles were launched from Iran and targeted at least two Iraqi military bases hosting U.S. military and coalition personnel at Al-Assad and Irbil.”
The news also sparked a surge in oil prices along with gold, which is considered to be a safe-haven asset.
Crude futures jumped more than 3% to around $64.94 per barrel. Gold futures for February delivery were up by 2%, trading at $1,605.50 per ounce and breaking above the $1,600 mark for the first time since 2013.
In Asia, markets tumbled, with the Nikkei 225 in Japan down more than 2%.
The Japanese yen, another safe haven asset, strengthened against the U.S. dollar, trading up 0.6% at 107.83.
Defense stocks rose broadly in after-hours U.S. trading. Kratos Defense & Security surged more than 9% while Northrop Grumman traded 4.4% higher. Lockheed Martin and Raytheon advanced by 4.8% and 2.2%, respectively.
Investors around the globe have been monitoring the latest developments between Iran and the U.S. after last week’s assassination of Gen. Qasem Soleimani, a top-ranking Iranian military official.
Stock initially sold off on Friday following news of Soleimani’s death while oil surged, stoking fears of a sharp rise in fuel prices that could dent an already fragile economy. In December, the U.S. manufacturing sector had its biggest contraction in more than a decade.
However, equities had managed to stabilize through the first two sessions of this week while oil gave back some of its earlier gains.
On Tuesday, the Dow lost more than 100 points while the S&P 500 also closed lower. The Nasdaq Composite ended the day just below the flatline.
“Most participants remained cautious … as it’s still unclear how the standoff between the U.S. and Iran could affect financial markets,” said Ken Berman, founder of Gorilla Trades, about Tuesday’s session. “Volatility remained relatively low today, but investors remained nervous.”