US futures plunge nearly a percent as Israel strikes Iran, sends oil soaring 9%, defense shares rally

In contrast to tech and consumer names, oil majors and defense stocks surged.

US equity futures fell sharply by nearly a percent on June 13 on middle-east jitters as Israel carried out strikes on Iran, rattling global stocks and sending crude oil prices sharply higher.

Dow Jones futures fell as much as 1.3%, while S&P 500 and Nasdaq 100 futures were down 0.9% and 1.1%, respectively, in early trade. The selloff also dragged down mega-cap tech names like Nvidia and Tesla, which led the recent recovery from April lows.

Adam Crisafulli of Vital Knowledge said the market's reaction was "predictable" but measured, citing the weakened state of Iran’s military and recent OPEC+ output hikes as moderating factors.

The geopolitical shock pushed oil prices into overdrive, with West Texas Intermediate crude surged nearly 9% to trade above $74 a barrel, while Brent climbed more than 8%. The dollar and gold saw strong gains in flight to safety, with gold up over 1%.

The airstrikes reportedly targeted Iran’s nuclear infrastructure and top military officials. Israel’s defense minister Israel Katz declared a state of emergency, while senior US officials said there was no American involvement in the strikes, and Iran should not target its presence in the middle east.

In a post on Truth Social, former President Trump urged Iran to “make a deal before there is nothing left,” warning of more brutal attacks if hostilities escalate further.

In contrast to tech and consumer names, oil majors and defense stocks surged. ExxonMobil and Chevron rallied nearly 3% each, while Lockheed Martin, RTX Corp, Northrop Grumman, and L3Harris Technologies jumped between 3% and 5% in premarket trade.

Prior to the flare-up, markets were on track to end the week higher, with the S&P 500 up nearly 0.8% and trading just 2% below its record high. But Friday’s developments have cast uncertainty over near-term risk appetite.

Investors are also watching for the University of Michigan’s preliminary consumer sentiment index for June, expected later in the day, for clues on the health of U.S. consumer demand amid global instability.